Gold & Silver Daily

Ed's Critical Reads

Nov 26, 2014

This Is What $11.71 Trillion Worth of Household Debt Looks Like

Household debt rose to $11.71 trillion in the third quarter.

According to the New York Federal Reserve's latest Household Debt and Credit report, household debt in the third quarter rose 0.7%, or $78 billion, to $11.71 trillion, up from $11.62 trillion in the second quarter.

Overall, household debt is below its $12.68 trillion peak reached in the third quarter of 2008.

"Outstanding household debt, led by increases in auto loans, student loans and credit card balances, has steadily trended upward in recent quarters," said Wilbert van der Klaauw, senior vice president and economist at the New York Fed. "In light of these data, it appears that the deleveraging period has come to an end and households are borrowing more."

Today's first story appeared on the businessinsider.com Internet site at 11:40 a.m. EST yesterday---and I thank reader U.D. for passing it around yesterday evening.

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How the World's Most Leveraged Hedge Fund Got Away with Insider Trading

While everyone is aware by now that the biggest component of SAC's abnormal outperformance over the years was its recourse to "information arbitrage" and its reliance on "expert networks", both of which managed to send the SAC logo to Federal Purgatory, if not the hedge fund's infamous art-collecting founder, one player in the massive hedge fund insider trading ring which was busted over the past few years, involves the one hedge fund, which as we have shown in the past, has the highest leverage in the U.S. if not the world: Citadel, with $142 billion in regulatory assets.

Today, we learn just how Ken Griffin's conglomerate also got its hands clean, and more importantly, how it managed to avoid any legal consequences.

As Bloomberg reported overnight, "the FBI files spell it out: An analyst at Citadel LLC, the hedge fund with $23 billion in capital invested globally, told agents he made millions of dollars trading on information from a company insider."

Normally, this would have been enough for the FBI to raid said hedge fund and at least settle for a fine, if not pursue outright prison time for those involved. This time, however, it did not.

This longish commentary about the Federals Reserve's private hedge fund was posted on the Zero Hedge Web site at 11:32 a.m. EST yesterday morning---and I thank Manitoba reader U.M. for sending it our way.

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Forex Rigging Probe: US Prosecutors to Grill London Traders

U.S. prosecutors are set to travel to London in the forthcoming weeks to probe City traders about currency market manipulation. However, British prosecutors are yet to file a criminal charge against UK financiers who rigged the rates.

U.S. Department of Justice (DOJ) officials will interview a group of current or former HSBC employees, along with other City bankers, as part of their criminal investigation into foreign exchange market (Forex) manipulation, inside sources told Reuters on Tuesday

The largely unregulated $5.3-trillion-a-day foreign exchange market is used by corporate treasurers and asset managers to value their funds.

The American body is currently investigating whether banks colluded to alter Forex rates and bolster their profits in the process. Such a maneuver is a violation of American and U.K. fraud and anti-trust laws. Prosecutors are also investigating whether traders deliberately misled their clients.

This offering from the Russia Today Web site appeared there at 5:43 p.m. Moscow time on their Tuesday---and it's the first contribution of the day from Roy Stephens.

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Symantec Discovers "Regin" Spy Code Lurking on Computer Networks

Security researchers say they have discovered a sophisticated piece of malicious code spying on researchers, governments, businesses, and critical telecommunications infrastructure since 2008.

The malware, called Regin, was first discovered by Symantec, the antivirus company, which released a white paper describing its findings on Sunday. On Monday, The Intercept, a digital magazine started by the journalist Glenn Greenwald, reported that the Regin malware is part of a decade-long joint operation by the National Security Agency and its British counterpart, the Government Communications Headquarters, or G.C.H.Q. The Intercept report is based in part on disclosures from former N.S.A. contractor Edward J. Snowden.

“In the world of malware threats, only a few rare examples can truly be considered groundbreaking and almost peerless,” Symantec wrote. “What we have seen in Regin is just such a class of malware.”

Symantec found evidence that the malware has been used on targets in 10 countries, primarily Saudi Arabia and Russia, as well as Pakistan, Afghanistan, India, Mexico, Ireland, Belgium and Austria. The Intercept reported Monday that the malware had been used to spy on companies in the European Union, notably Belgacom, a partly state-owned Belgian phone and Internet provider.

This very interesting article appeared on the New York Times Web site on Monday at 12:42 p.m. EST---and it's the second offering of the day from Roy Stephens.

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France Postpones Mistral Delivery to Russia over Ukraine "Until Further Notice"

President Francois Hollande has decided to suspend delivery of the first Mistral-class ship to Russia "until further notice," citing the situation in Ukraine as the reason, media reported an Elysee Palace statement.

"The President of the Republic believes that the current situation in the east of Ukraine still does not allow the transfer of the first Russian Mistral-type ships to Russia," a statement from the Elysée Palace said.

In this regard, Francois Hollande felt it necessary to postpone the new order to study the request for permission to supply Russia with the first Mistral vessel, the communique informed.

Russian Deputy Defense Minister Yury Borisov said it will patiently wait for the fulfillment of the contract, RIA Novosti reports.

This news story put in an appearance on the Russia Today Internet site at 11:50 a.m. Moscow time on their Tuesday morning, which was 3:50 a.m. EST on  Monday morning.

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EU Is "Aged and Weary," Pope Says

In a highly anticipated speech attended by almost all members of the European Parliament, pope Francis on Tuesday (25 November) criticised the E.U.'s treatment of migrants, its institutions, and its focus on growth and consumerism.

“Despite a larger and stronger Union, Europe seems to give the impression of being somewhat aged and weary, feeling less and less a protagonist in a world which frequently regards it with aloofness, mistrust, and even, at times, suspicion”, he said during his speech in Strasbourg.

He likened the European continent to “a grandmother, no longer fertile and vibrant”.

Francis also signalled a “growing mistrust on the part of [EU] citizens towards institutions … engaged in laying down rules perceived as insensitive to individual people, if not downright harmful.”

No flies on this guy, as he understands the situation perfectly---and isn't afraid to say so.  This article appeared on the euobserver.com Internet site at 3:34 p.m. Europe time Tuesday afternoon---and it's also courtesy of Roy Stephens.

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Jean-Claude Juncker's €315 Billion "New Deal" Dismissed as a Subprime Gimmick

The European Commission has launched a €315bn “New Deal” to pull Europe out of its economic slump over the next three years, but will provide almost no new money of its own and is relying on subprime forms of financial engineering.

The shopping list of investments and infrastructure projects will take months to sift through, and the stimulus will not reach meaningful scale until 2016. The scheme has already run into a blizzard of criticism. It depends on leverage that increases the headline figure by 15 times, leaving EU taxpayers bearing the heaviest risk while private investors are shielded from losses.

Jean-Claude Juncker, the Commission’s embattled new president, has made the plan the centre piece of his “last chance” drive to restore popular faith in the E.U. project, but it risks becoming an emblem of paralysis and failure instead.

“The money is chicken feed and it won’t do anything to kick-start growth,” said Professor Charles Wyplosz, from Geneva University. “It is unbelievable they are doing this rather than real fiscal expansion. The private sector will just take governments to the cleaners.

This Ambrose Evans-Pritchard commentary showed up on the telegraph.co.uk Internet site at 6:21 p.m. GMT yesterday evening---and it's courtesy of South African reader B.V.  It's worth your while if you have the time---and the interest.

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German Foreign Minister: "Crimea Will Remain a Source of Conflict"

German Foreign Minister Frank-Walter Steinmeier warned recently that leaders should tone down their rhetoric on Russia. SPIEGEL asked him whether his comments were directed at Chancellor Merkel and how he believes the conflict with Russia might develop.

German Chancellor Angela Merkel is a master at keeping her cool, even when the pressure becomes almost unbearable. This may explain why a speech she gave at the Lowy Institute for International Policy in Sydney, immediately following the G-20 summit in Brisbane, turned so many heads. Her comments in Sydney were the clearest indication yet that she is losing patience with Russia. "Outdated thinking in terms of spheres of influence which tramples international law underfoot must not be allowed to prevail," she said. "Russia is violating the territorial integrity and the sovereignty of Ukraine."

During the audience discussion after the speech, Merkel warned that "we're not just talking about Ukraine. We're talking about Moldavia, about Georgia. If things go on, we'll be talking about Serbia and the Western Balkans."

Coming as it did just hours after an interview with Russian President Vladimir Putin was aired on German television, the speech was seen as a direct and forceful response. And it seemed to make German Foreign Minister Frank-Walter Steinmeier uncomfortable. It is important, he said not long after Merkel's comments, "that in our use of language in public, we do not eliminate our chances of contributing to the easing of tensions and to the mitigation of conflict."

This interview/article was posted on the German website spiegel.de at 12:34 p.m. Europe time on Tuesday---and it's definitely a must read if you're a serious student of the New Great Game.  It's courtesy of Roy Stephens once again, for which I thank him.  The headline above is new---and certainly more provocative than its original title, which was German Foreign Minister Steinmeier on Russia and Ukraine.

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Russia’s Eighth Humanitarian Convoy to Deliver Aid to Eastern Ukraine on Nov. 30

The eighth convoy of Russia’s Emergency Situations Ministry is expected to deliver humanitarian aid to Donbass on November 30, the Russian deputy emergency situations minister said on Tuesday.

“Over 100 vehicles are due to cross the border on Sunday. They are to deliver 1,000 tons of cargo,” Vladimir Stepanov said.

The convoy will consist of building materials needed for the destroyed houses: glass, slate, roofing material and also fuel.

Stepanov said one half of vehicles will go to Lugansk while the other one to Donetsk. “We know exactly where this aid will go,” Stepanov said.

This short article appeared on the itar-tass.com Internet site at 10:29 a.m. Moscow time on their Tuesday morning---and once again I thank Roy Stephens for sharing it with us.

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Russia Looks to the East, but It Still Needs Europe

Anyone reading the Western business press relating to Russia recently will be left with the distinct impression that global trading relations with this part of the world are undergoing a momentous and irreversible shift east. Russian business ties with the West are severed, sanctioned and broken. Asian players, most prominently the Chinese corporations, are set to step in and fill the gaps left by retreating Western investment.

Certainly the recent fanfare of political handshaking ceremonies and deal signings would support such a proposition. The APEC Summit in Beijing in November saw Moscow and Beijing conclude an agreement between state-backed companies Gazprom and China National Petroleum Corporation (CNPC) to supply gas from Western Siberia to China, from gas fields currently piped to Europe. This follows hot on the heels of the “Power of Siberia” project agreement between these companies signed in May with a purported $400bn deal value. If both projects are completed, overall volumes of gas supplies to China could exceed those supplied to Europe over the medium term.

Nonetheless, there remains a high level of scepticism in many business circles, including many Russian ones, as to how real or achievable this pivot east really is, at least in the short to medium term. The reality is that Europe will remain by far Russia’s largest export market for gas and as a bloc its largest overall trading partner for years to come. U.S. trade with Russia is much lower, but even so the U.S. remains Russia’s single largest foreign direct investor for infrastructure and power projects.

The Gazprom-CNPC deals are still just broad framework agreements, the latest milestones in years of protracted negotiations, with much planning and negotiation of the underlying contracts still to come. When speaking to bankers and professional advisers in Moscow, Beijing and Shanghai, there is a large element of wait-and-see about the realistic levels of deal flow that might emanate from Russian-Asian business cooperation over the next few years, as compared to those relating to Russian-Western trade and investment.

This opinion/analysis piece appeared on the russia-insider.com Internet site early yesterday morning Moscow time---and it's the second offering of the day from reader B.V.

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Remarks by Foreign Minister Sergey Lavrov at the XXII Assembly of the Council on Foreign and Defence Policy, Moscow, 22 November 2014

1)  Lavrov is considered very much a "moderate" and his language has always been strictly diplomatic.  So when you read Lavrov, just imagine what folks in other Russian ministries are thinking.
2) Lavrov makes no secret of his view of the USA and of his plans for the future of our planet.  When you read his words, try to imagine what a US Neocon feels and thinks and you will immediately see why the US elites both hate and fear Russia.
3) Finally, Lavrov openly admits that Russia and China have forged an long-term strategic alliance (proving all the nay-sayers who predicted that China would backstab Russian wrong).  This is, I would argue, the single most important strategic development in the past decade.
4)  Finally, notice the clear contempt which Lavrov has for a pseudo-Christian "West" which dares not speak in defense of persecuted Christians, denies its own roots, and does not even respect its own traditions. Russia did not want this conflict.  Russia did everything in her power to prevent it.  But the West left Russia no choice and Russia now openly declares her willingness to fight and prevail.  

Of all the non-precious-metals related stories in today's column, this is by far the most important---and falls into the absolute must-read category, especially for all serious students of the New Great Game.  It was posted on the vineyardsaker.blogspot.ca Internet site yesterday---and I thank Roy Stephens for bringing it to my attention---and now to yours.

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Saudi Sights Set on US Shale at Crucial OPEC Meeting

OPEC's biggest crude producer Saudi Arabia will have its sights set on the upstart US shale oil business at a crucial cartel meeting to debate possible output cuts on Thursday.

Analysts say the kingdom is content to see shale oil producers -- and even some members of the cartel -- suffer from low prices and will resist pressure to reduce output and shore up the cost of oil.

A barrel of crude has plunged by about one third in value since June to around $80 in an increasingly competitive market.

Saudi Oil Minister Ali al-Naimi was silent about his government's intentions Monday as he arrived in Vienna ahead of the OPEC gathering.

This AFP story, filed from Riyadh, showed up on the news.yahoo.com Internet site late on Monday evening---and it's courtesy of Casey Research's own Dennis Miller.

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Four Major Oil Producers Say Current Oil Prices Too Low

Russia, Venezuela, Saudi Arabia, Mexico agreed that current oil prices were too low and decided to take coordinated actions to revert the trend, Venezuela’s foreign minister said.

Venezuelan Foreign Minister Rafael Ramirez attended energy talks in Vienna with officials from Russia, Saudi Arabia and Mexico in Vienna earlier in the day.

“Everyone agreed that the current price is bad. We will continue our work. Everyone is concerned about the price,” he told reporters after the talks.

“The price should be $100 per barrel, this is a fair price,” he said.

This news item put in an appearance on the sputniknews.com Internet site at 7:15 p.m. Moscow time on Tuesday evening---and is the final offering of the day from Roy Stephens, for which I thank him on your behalf.

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CFTC Tells CME Group to Work More on "Spoofing" Detection

CME Group Inc, the world's largest futures market operator, should continue to develop strategies to detect an illegal manipulative trading practice known as "spoofing," the U.S. Commodity Futures Trading Commission said on Monday.

Spoofing involves rapidly placing orders to create the illusion of market demand. Unsuspecting traders are then tricked into buying or selling at artificial prices, only to later find that the orders were canceled.

The practice gained notoriety last month after high-frequency trader Michael Coscia was charged with manipulating commodity futures prices in the first U.S. federal criminal prosecution of spoofing.

This Reuters article, filed from Chicago, was posted on their Web site at 6:51 p.m. EST on Monday evening---and it's courtesy of Manitoba reader U.M.

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Grant Williams: How Could It Happen?

In the new edition of his Things That Make You Go Hmmm... letter, Singapore fund manager Grant Williams writes some future history that regards GATA favorites Alasdair Macleod and Koos Jansen as prophets of a Chinese-engineered golden age -- an age golden, at least, for those who heeded the prophets and got their gold in time.

Williams' letter is headlined "How Could It Happen?" and it was posted at the mauldineconomics.com Internet site yesterday sometime--and I found it embedded in a GATA release.

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FT's Tett: Gold “Tangible” and “Clear”; People “Unnerved” About “Money” in “Bottomless Cyber Space”

While we agree that Greenspan's legacy is a tarnished one, we also recall his statement to Marc Faber at the New Orleans Investment Conference last month where he said "I never said the central bank is independent."

At that conference he also stated that the Federal Reserve was sitting on "a pile of tinder" and that gold would go "measurably higher."

Gillian Tett has a record of unbiased analysis and commentary regarding the gold markets. In 2011 she suggested that it would be "foolish to simply deride or ignore" the Gold Anti-Trust Action Committee (GATA). 

GATA's contention of manipulation of the gold markets have now been borne out.

Tett is highly respected both in journalism but also in financial and economic circles. In her previous roles, she was U.S. Managing Editor and oversaw global coverage of the financial markets. In March 2009 she was Journalist of the Year at the British Press Awards. In June 2009 her book Fool’s Gold won Financial Book of the Year at the inaugural Spear’s Book Awards.

This Financial Times story by Gillian Tett received 'the treatment' from Mark O'Byrne yesterday.  Gillian's FT story was the headline to my Friday column---and even though Mark's efforts are a day or so late, they definitely aren't the proverbial dollar short, as I consider Mark to be one of the best writers on the Internet---and his analysis of this news item in the current financial environment are definitely worth your time.  I found it on the goldcore.com Internet site yesterday.

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Nick Laird: Gold Algos Run Wild

Goldbugs hearts were racing today as gold roared up whilst Comex was closed for 1/2 hour. The price started leaping once it got over $1,200 & topped out at the price of $1,466.38 - a 22% rise of$270.

It was live on multiple websites and data feeds across the web so many got to watch the excitement. Goldbugs watched the prices on NetDania, iFeed and eSignal data feeds and on websites such as www.usagold.com and www.bulliondesk.com so the price increase appeared real.

Comex shorts must have been wetting themselves.

What must be asked is what was happening to these live quotes that gold rose almost $270 on multiple data feeds? Who was doing the watching---and who did the monitoring---and then the correction? Someone in control was watching these live feeds and reacting to them? What was happening to the quote stacks - who was buying/selling - did it really happen?

Well, dear reader, I was totally oblivious to this amazing event, as I only follow Kitco at home---and we even use Kitco pricing at the store.  I didn't even hear about it from any of my readers until early yesterday evening.  The first I heard of it was when Nick sent me this story very late yesterday afternoon Mountain Standard Time.  It's definitely worth looking at---and it's posted on the sharelynx.com Internet site.  Nick also sent along the Zero Hedge commentary on it---and it's headlined "Something Appears to Be Going On with Gold". [And as of 4:30 a.m. EST this morning, I haven't heard another thing about it. - Ed]

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French Populist Leader Joins Gold Repatriation Campaign

Marine Le Pen, leader of the populist National Front political party in France and likely France's next president if the country should last until another election, has picked up the gold repatriation issue by writing to the governor of the central bank, the Banque de France. Le Pen's letter, translated from French to English, is posted at her party's Internet site.

An official of the central bank disclosed last year that it is secretly trading gold for its own account and for other central banks "nearly on a daily basis."

That same official said this month that central banks are managing their gold reserves "more actively" these days, while worrying more about "auditability," perhaps since the gold sometimes is construed to be in more than one place at the same time.

This commentary appeared on the gata.org Internet site yesterday---and it's definitely worth reading.  And although I thank Chris Powell for wordsmithing 'all of the above'---the first person through the door with this yesterday was reader U.M.---and she also sent along the Zero Hedge commentary on this headlined Here Comes France: Right-Wing Leader Marine Le Pen Demands Central Bank Repatriate French Gold.  It's worth reading as well.

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Guardian's Report on Swiss Gold Initiative Quotes GATA Consultant Koos Jansen

The Swiss like referendums: there were 11 last year and there have been nine more this year, on subjects ranging from who pays for abortions to whether the state should buy a certain type of new fighter aircraft.

This Sunday there are three more, but one has attracted more attention than most because there are fears that if it wins majority support it could trigger a worldwide gold rush.

Five million Swiss voters are to decide on a proposal that would force the central bank to triple its gold reserves. The vote is being watched closely by financial markets and governments around the world. ...

"Gold continues to trigger impetuous and irrational reactions in many people," Sergio Rossi, professor of macroeconomics and monetary economics at Fribourg University, told the Swiss news agency SDA.

This Swiss gold referendum-related story appeared on theguardian.com Internet site at 9:24 p.m. GMT yesterday evening---and I found it posted on the gata.org Internet site.  The article's real headline reads Fears that ‘dangerous’ Switzerland referendum could spark gold rush.

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Indian Government Investigating Black Money in Swiss Banks Entering India Via Gold Import

Following reports of a sharp increase in the import of gold from Switzerland, Indian authorities have started investigating whether unaccounted money parked by Indians in banks these is entering India in the form of gold.

From this year, Swiss authorities have started disclosing that country’s import, as well as export, of precious metals. Between January and October, Switzerland exported 380 tonnes of gold to India. In January, India’s share in Switzerland’s overall gold and silver exports stood at 14.1%. This has increased to 16%.

So far this year, India has imported 27.7% of the gold exported by Switzerland; in January, this was only 15%.

The Centre has asked the customs department and the Reserve Bank of India to tally the gold imported from Switzerland with export data released by Swiss authorities and the payment for gold by India to banks and traders in Switzerland in March. A source said if both sets of data matched, one could conclude there was no direct relation between the gold imported from Switzerland to India and the black money parked in that country. “We believe even if the black money parked there is entering India through gold import, it will not come directly from Switzerland; importers will route that through Hong Kong of Dubai to hide the true identity.”

This interesting story, filed from Mumbai, was posted on the business-standard.com Internet site late Tuesday evening IST---and it's another offering from reader U.M.

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China’s Gold Imports Through Hong Kong Rise for a Third Month on Jewelry Sales

China’s gold imports from Hong Kong rose for a third month as increasing jewelry sales countered weakening demand for the metal as an investment amid falling prices.

Net imports totaled 69 tonnes in October, compared with 61.7 tonnes the previous month and 129.9 tons a year earlier, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department today. Exports to the territory from China rose to 42.4 tons in October from 30.1 tons in September, the statistics department said in a separate statement. The figures don’t represent all imports of the metal by China, which doesn’t publish such data.

The value of China’s jewelry sales in October rose 2.9 percent from the previous month, according to the National Bureau of Statistics. Bullion fell below $1,200 an ounce last month and erased its gains for the year as the U.S. economy improved and the dollar strengthened on prospects for higher interest rates, damping demand for precious metals as an inflation hedge.

“Higher jewelry sales for the third month defied some earlier forecasts that Chinese demand would falter after falling prices,” Liu Xu, an independent gold analyst in Beijing, said by phone before the data was released.

As usual, the official import data through Hong Kong was leaked early---and here's the story about it in this Bloomberg article that was filed from Beijing at 3:43 a.m. Denver time on Tuesday morning.  Nick Laird won't be able to update his chart on this until the official numbers are released in the first week of December.  This is another gold-related news item from reader U.M.

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Chow Tai Fook Jewelry Group Plots New Grounds to Chase China’s Tourists

Chow Tai Fook Jewellery Group Ltd. (1929) plans to open new stores outside its main markets in Hong Kong and China, as it chases its Chinese customers outside familiar territory.

“While overseas travel is increasingly popular among the Mainland Chinese, it means more and more of their shopping budgets are spent in the new tourist destinations outside our major markets,” the world’s largest listed jewelry chain said in a statement to the Hong Kong Stock Exchange yesterday.

Chow Tai Fook plans to double its number of points of sales, including concessionaires and standalone outlets, in the next 10 years. Stores in tourist hotspots outside mainland China and Hong Kong will also be its target “to capture the spending power of the affluent outbound Mainland Chinese tourists,” it said.

The expansion plan comes as the jeweler said pro-democracy protests held near its Hong Kong stores curtailed Chinese tourists. Travelers from China splurged the most on tax-free shopping last year, accounting for 27 percent of spending, according to a study by tax-refund points operator Global Blue.

This very interesting gold-related news item, filed from Hong Kong, appeared on the Bloomberg Web site at 6:52 p.m. Mountain Standard Time yesterday evening---and once again it's courtesy of reader U.M.

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Lawrence Williams: Global Gold Supply in Deficit This Year, Even More So Next

In a previous article we have already shown that Indian and Chinese gold demand between them currently account for annual gold consumption levels of perhaps as much as 3,100 tonnes, roughly equivalent to global new mined gold production as recorded by the World Gold Council (3,115 tonnes over the 12 months to end September).

The Chinese and Indian figures we have recorded are probably themselves understated – with Indian consumption swelled by smuggled gold imports to avoid the 10% import duty and take advantage of the gold premiums on the Indian markets. China’s figures are also understated in that they are mainland China figures and do not include Hong Kong net gold imports which probably should add another 40-50 tonnes to the figure given that Hong Kong is technically part of China, but in terms of economic statistics, including gold net imports, it is treated as an independent state.

For the 12 months to end September this year, Asia, other than China and India, is reported to have consumed some 280 tonnes, Middle East 218.6 tonnes, Turkey 121.9 tonnes, Russia 73.8 tonnes, USA 174.3 tonnes, Europe ex-CIS 272.1 tonnes and Other (countries not detailed in the main table) 425.3 tonnes, giving us the overall total of 1,566 tonnes.

The WGC’s Gold Demand Trends data puts global supply for the 12 months to end-September over and above new mined production at 1,143.5 tonnes. Taking our own figures for Chinese and Indian demand as being approximately equal to global new mined production that suggest to us that gold supply is going to be in deficit this year to the tune of around 420 tonnes plus, which is fairly substantial in the supply/demand equation (around 10%).

Lawrie correctly concludes that the reason that gold prices aren't higher is because of the antics of JPMorgan et al in the Comex futures market.  This must read commentary showed up on the mineweb.com Internet site yesterday---and it's the final offering of the day from Manitoba reader U.M.---and I thank her on you behalf.

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John Hathaway: Monetary Tectonics

The modern-day central banker trades with counterparties that are giant commercial banks with derivative books of disturbing scale and complexity. It seems impossible that these commercial exposures could be constructed and maintained without the knowledge and complicity of the official sector. For example, Deutsche Bank, already a defendant in 1,000 lawsuits, claims derivative exposure that is 20 times the GDP of Germany and 5 times that of the entire Eurozone. It is not a great leap to suggest that central-bank traders and their megabank opposites – spawn of the same gene pool, schooled in the same institutions, career paths intertwined, frequenters of the same conferences, and just a speed-dial away – are ideologically indistinguishable and intellectually and morally corrupt in equal proportion. We applaud the efforts of litigators and plaintiffs already in process and those in the wings, and look forward to the depositions and discoveries yet to come.

Whether the eventual cessation of manipulative practices translates into a change of trend for the gold price remains to be seen, although it seems logical that the bullish consensus for financial assets equates to a complacent and very large short position in gold that will have to be covered (37.5 million troy ounces). More important, as we demonstrated in “Let’s Get Physical”, there is a massive asymmetry between paper claims on gold and physical metal. Should Western investment demand, accustomed to acting only through financial instruments such as ETFs, futures contracts, and derivatives, revive only modestly, the fragile link between paper claims and the real thing – which has been stretched and contorted by extreme rehypothecation (the use by financial institutions of clients’ assets, posted as collateral) – could easily shatter. The major winners in a systemic repricing of gold will be those who own or produce the real thing.

John's got such a way with words---and this right-on-the-money commentary was posted on the tocqueville.com Internet site yesterday---and I thank him for sliding a copy of it into my inbox before I found it on my own.  It's an absolute must read of course---and probably deserves a second read as well.

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Nov 25, 2014

Global Business Confidence Collapses To Post-Lehman Lows

As we noted before, despite record high stock prices and talking-heads imploring investors to believe CEOs are confident, they are not (consider the clear indication of a lack of economic confidence from tumbling capex and soaring buybacks), That is further confirmed today as Markit's survey of over 6000 firms showed optimism falling sharply in October, dropping to the lowest seen since the survey began five years ago. Hiring and investment plans were also at or near post-crisis lows, while price expectations deteriorated further. More worrying, perhaps, is the US is not decoupled whatsoever, with future expectations of US business activity at the lowest since the financial crisis.

The Markit Global Business Outlook Survey, which looks at expectations for the year ahead across 6,100 companies, showed optimism falling sharply in October, dropping to the lowest seen since the survey began five years ago. Hiring and investment plans were also at or near post-crisis lows, while price expectations deteriorated further.

This article appeared on the Zero Hedge website at 9:48 p.m. EST yesterday evening---and today's first news item is courtesy of Manitoba reader U.M.

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Senator Elizabeth Warren vs. New York Fed's William Dudley

Senate Banking Subcommittee hearing in Washington, D.C., U.S., Nov. 21, 2014.
"Improving Financial Institution Supervision: Examining and Addressing Regulatory Capture"
Financial Institutions and Consumer Protection

“I don’t think anyone should question our motives or what we are attempting to accomplish.” William Dudley

"Change has to come from the top. Either you need to fix it Mr. Dudley or we have to get someone who will." Sen. Elizabeth Warren

What a greasy little slime ball this Bill Dudley is, but he's no match for Senator Warren.   This 9:30 minute youtube.com video clip was posted there last Friday---and I thank Toronto reader 'MichaelG' for sending it along.

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Note to Dudley: Everyone Questions the NY Fed’s Motives – For Good Reasons

The NY Fed and Goldman have combined again to produce fingers scraping on a moral blackboard. The story is – not – told coherently in a New York Times piece.

I’ll comment on only two aspects of the incoherent story. First, contrary to the NYT portrayal of the story, there is typically no ambiguity about whether regulatory information is confidential and there was no ambiguity about the particular information that we read (albeit, not in the NYT) that the NY Fed employee leaked to his former colleague after he joined Goldman Sachs.

Second, the NY Fed’s head, William Dudley’s, response to the latest scandal was “I don’t think anyone should question our motives.” I will argue that given the NY Fed’s intolerable institutional conflicts of interest, and the defense of continuing that conflict by the NY Fed’s leadership, e.g., Dudley, everyone should the regional Feds’ motives.

The NYT article revealed that a former NY Fed employee “Rohit Bansal, the 29-year-old former New York Fed regulator, was [hired by Goldman]. At the time he left the Fed, Mr. Bansal was the “central point of contact” for certain banks.” You have to read two-thirds of the story before you learn Bansal’s name and reading the entire story doesn’t tell you his positions and duties at the NY Fed or Goldman.

William K. Black carves Dudley a new one in this article that appeared on the neweconomicperspectives.org Internet site last Thursday---and it's definitely worth reading.

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Sprott's Thoughts: Interview with Ex-Congressman David Stockman

Q: David, can you explain how the ‘Fed put’ works on the stock markets and bond markets? How exactly does it translate into artificially higher stock prices and lower interest rates?

A:  The Fed injects massive amounts of liquidity into Wall Street through the dealer system – that is, the 21 authorized treasury-bond dealers. The liquidity comes in the form of new credits to their bank accounts supplied by the Fed in return for the governments bonds, notes and bills, and even the GSE (Government-sponsored entity) obligations that it buys from them. The credit that the Fed supplies to the dealers is manufactured out of thin air; therefore it expands total credits and liquidity in the system. The dealers use it to buy other types of securities – stocks, bonds, derivatives positions and so forth.

Historically, the purpose of the Fed’s open-market intervention in this form was to encourage the banking system to extend credit to the business and household sectors, thereby stimulating economic growth, as predicated by the Keynesian model. That was always a one-time parlor trick, however, because with each cycle of easing leverage ratios in the business and household sectors were ratcheted steadily higher. Household debt ratios, for example, went from 80 percent of wage and salary income prior to 1975 to 220 percent by 2007.

The problem today is that we have reached ‘peak debt.’ The household sector has $13.3 trillion of debts, even after the modest post- crisis deleveraging; the ratio is still sky-high at 180 percent of wage and salary income.

Consequently, the household sector has been unable to borrow more money, no matter how much credit the Fed has injected through the dealers. That’s very different from where this whole Keynesian financial bubble started 40 years ago when we had, more or less, clean household balance sheets.

This interview was posted on the sprottglobal.com Internet site yesterday sometime.

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Terrorism laws: 'Time is right' for new police powers in the U.K.

Police and security services will get new powers as the U.K. faces a terror threat "perhaps greater than it has ever been", the home secretary says.

Unveiling a new counter-terrorism bill, Theresa May said the U.K. faced a security struggle "on many fronts".

Schools, universities and councils will be required to take steps to counter radicalisation.

Internet providers will have to retain Internet Protocol address data to identify individual users.

This article appeared on the bbc.com Internet site at 9:22 a.m. EST on Monday morning---and I thank International Man Senior Editor Nick Giambruno for passing it around.

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E.U. still undecided on France deficit

Fiscal hawks and doves within the E.U. commission and member states continue to disagree on how to deal with France's budget deficit, seen as a credibility test for the E.U..

A meeting of heads of cabinets of E.U. commissioners over the weekend ended without a clear decision on possible sanctions for Paris for having again missed the three-percent deficit target for next year.

France has a projected deficit of 4.3 percent of GDP in 2015 and has announced it will meet the deficit target only in 2017.

Handelsblatt reports that a eurozone finance ministers meeting scheduled for next Monday (1 December) to discuss the E.U. commission's verdicts on the nationals budgets is likely to be postponed.

This story, filed from Brussels, showed up on the euobserver.com Internet site at 9:22 a.m. Europe time on their Monday morning---and I thank Roy Stephens for his first offering of the day.

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Weidmann warns of "legal limits" on further moves by ECB

The head of Germany's Bundesbank cautioned the European Central Bank on Monday about the legal hurdles it would face in embarking on money printing to buy government bonds, underlining its opposition to such a move.

The remarks from Jens Weidmann, who also sits on the ECB's Governing Council, raise a further question mark over ECB President Mario Draghi's ability to deliver after Draghi threw the door open for further measures to bolster the euro zone.

Draghi's comments last week were interpreted by some as meaning that buying government bonds with new money, a policy known as quantitative easing, could come as soon as early 2015. But he faces stiff opposition from Germany.

This Reuters story, filed from Madrid, put in an appearance on their website at 11:42 a.m. EST yesterday---and I thank Manitoba reader U.M. for her first contribution to today's column.

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Not jumping for joy: Ukraine, a year later

Just over a year ago, thousands of Ukrainians took to Kiev's main square, angry at oligarchs and corruption. But instead of “Europe” and prosperity, they got a coup, more oligarchy, and war.

During the three-month “people power” spectacle in Kiev's Independence Square (Maidan Nezalezhnosti) that began on November 21, 2013, one of the protesters' favorite chants was “Who doesn't jump is a Moskal” (a derogatory term for Russians). After three months of “jumping” - which involved attacking the police, attempting to storm government buildings, and cheering US and European officials who came to support them, the protesters overthrew the legally elected president and establish their own government on February 22, 2014. It has been nine months since then – and a whole year since the “Maidan” protests began; let's try to see what they've been “jumping” for.

Much like the 2004 “Orange Revolution,” the Maidan protest was an exercise in perception management. Officially, the reason the protesters gathered was the government's balking at signing the EU accession treaty. A TV, internet and social media campaign – the very name “EuroMaidan” was a Twitter hashtag coined by some clever PR professional – got the people riled up against the government presented as corrupt, incompetent and selfish.

Was this so? Part of the problem with the E.U. treaty was that it demanded Ukraine restructure its entire apparatus of state and society to the Union's standards, which would have cost something like $19 billion a year for the next decade (per The Telegraph). But Brussels was willing to offer a paltry $750 million (€610 million) in loans. Ukraine needed much more just to stay solvent. It was, by all metrics, a bad deal for Ukraine.

This very interesting op-edge was posted on the Russia Today website at 2:28 p.m. Moscow time on their Monday afternoon, which was 6:28 a.m. EST in New York.  I thank Roy Stephens for sending it---and it's definitely worth reading if you have the time or the interest, that is.

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Summit of Failure: How the E.U. Lost Russia over Ukraine

One year ago, negotiations over a Ukraine association agreement with the European Union collapsed. The result has been a standoff with Russia and war in the Donbass. It was an historical failure, and one that German Chancellor Angela Merkel contributed to.

Only six meters separated German Chancellor Angela Merkel and Ukrainian President Viktor Yanukovych as they sat across from each other in the festively adorned knight's hall of the former Palace of the Grand Dukes of Lithuania. In truth, though, they were worlds apart.

Yanukovych had just spoken. In meandering sentences, he tried to explain why the European Union's Eastern Partnership Summit in Vilnius was more useful than it might have appeared at that moment, why it made sense to continue negotiating and how he would remain engaged in efforts towards a common future, just as he had previously been. "We need several billion euros in aid very quickly," Yanukovych said.

Then the chancellor wanted to have her say. Merkel peered into the circle of the 28 leaders of EU member states who had gathered in Vilnius that evening. What followed was a sentence dripping with disapproval and cool sarcasm aimed directly at the Ukrainian president. "I feel like I'm at a wedding where the groom has suddenly issued new, last minute stipulations."

The EU and Ukraine had spent years negotiating an association agreement. They had signed letters of intent, obtained agreement from cabinets and parliaments, completed countless diplomatic visits and exchanged objections. But in the end, on the evening of Nov. 28, 2014 in the old palace in Vilnius, it became clear that it had all been a wasted effort. It was an historical earthquake.

This long essay, which is also definitely worth reading, appeared on the German website spiegel.de at 7:00 p.m. Europe time yesterday evening---and it's also courtesy of Roy Stephens.

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Suspension of Russian coal supplies to trigger electricity shortages in Ukraine — expert

Suspension of coal supplies from Russia will entail serious energy shortages in Ukraine, a Ukrainian expert said on Monday.

“It is a very dangerous signal: if we receive no coal from Russia we have little chance to find other sources to substitute for it,” Dmitry Marunich, a co-chairman of the Ukrainian Energy Strategies Fund, told the 112 Ukraine television channel. “We will simply have no time and money to sign coal contracts with other suppliers in other countries. We must not let it happen. It will trigger a serious shortage in electricity supplies and rotating power cuts will be inevitable.”

Earlier on Monday, Ukraine’s Minister of Energy and Coal Industry Yury Prodan confirmed reports that Russian companies had suspended exports of steam coal to Ukraine.

“According to information I have received from DTEK and Centrenergo, Russian companies have suspended coal export to Ukraine,” he told the Ukrainskaya Pravda newspaper. “I do not know why but I can say that the reasons are not economic. Both DTEK and Centrenergo pay for coal in due time.”

This very interesting news item, filed from Kiev, appeared on the itar.tass.com Internet site at 10:06 p.m. Moscow time on their Monday evening---and I thank Roy Stephens for sending it.

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Russia fears ethnic cleansing in Ukraine amid rise of neo-Nazism – Putin

As Kiev continues to amass its forces in eastern Ukraine despite the ceasefire and use radical nationalist groups as armed battalions, Moscow is concerned about possible ethnic cleansing there, Russian President Vladimir Putin told ARD in an interview.

Speaking with Hubert Seipel of the German channel ARD ahead of the G20 summit, Putin warned of catastrophic consequences for Ukraine if the Kiev government continues to nurture radical nationalism and Russophobia, including in the ranks of its military and National Guard units that are still being sent as reinforcements to the country’s troubled east.

“Frankly speaking, we are very concerned about any possible ethnic cleansings and Ukraine ending up as a neo-Nazi state. What are we supposed to think if people are bearing swastikas on their sleeves? Or what about the SS emblems that we see on the helmets of some military units now fighting in eastern Ukraine? If it is a civilized state, where are the authorities looking? At least they could get rid of this uniform, they could make the nationalists remove these emblems,” Putin said.

This article showed up on the Russia Today website eight days ago---and it's also courtesy of reader M.A.

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Russia-Europe: Sanctions Losing Steam

The foreign ministers of the European Union discussed the situation in Ukraine and their turbulent relations with Moscow agreeing that there is no point to enhance sanctions against Russia.

The meeting in Brussels came on the heels of G20 summit in Brisbane and was followed by German Foreign Minister visit to Moscow in a clear sign that all sides are not ready to prolong the standoff and strive to find the solution to the crisis in Ukraine.

Studio guest Ernest Sultanov, expert from MIR-initiative, an independent think-tank in Moscow, Dr. Hubertus Hoffmann, the Founder and President of World Security Network Foundation, Horvath Gabor, Foreign Editor of Népszabadság newspaper, Budapest, and Soren Liborious, Spokesman, Head of Press and Information Delegation of the European Union to Russia, shared their opinions with Radio Sputnik

No sanctions were imposed on Russia following the talks in Brussels. Don’t you have a feeling that Europe doesn’t have stomach for sanctions?

Ernest Sultanov: The sanctions are really bad for both sides. So, I don’t think they don’t have stomach to impose the sanctions, I think both sides have to find some other solutions to resolve the issues between them.

This interview was posted on the sputniknews.com Internet site at 12 o'clock noon Moscow time on Saturday---and I thank South African reader B.V. for finding it for us.

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Christie’s Sells Serov’s Painting for Record $14.5 Million

The fine arts auctions house Christie's has sold Valentin Serov's painting Portrait of Maria Zetlin for $14,511 million during bidding in London, setting a record for a piece of Russian art sold at auction.

Serov's work was put up for auction by Israeli city Ramat Gan's administration. Christie's had initially estimated the painting's price at $2.3-$3.9 million.

"The Portrait of Maria Zetlin is without doubts, Serov's most unique work, which I had the honor of holding in my hands during a long history of my work at Christie's," International director of Christie's Russian Art Department Alexei Tizengauzen said ahead of the auction.

This interesting news story, filed from Moscow, showed up on their Internet site at 8:45 p.m. Moscow time yesterday evening local time---and I thank reader M.A. for finding it for us.

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Sun sets on OPEC dominance in new era of lower oil prices

It wouldn’t be the first time that a meeting of the Organisation of Petroleum Exporting Countries (OPEC) has taken place in an atmosphere of deep division, bordering on outright hatred. In 1976, Saudi Arabia’s former oil minister Ahmed Zaki Yamani stormed out of the OPEC gathering early when other members of the cartel wouldn’t agree to the wishes of his new master, King Khaled.

The 166th meeting of the group in Vienna next week is looking like it could end in a similarly acrimonious fashion with Saudi Arabia and several other members at loggerheads over what to do about falling oil prices.

Whatever action OPEC agrees to take next week to halt the sharp decline in the value of crude, experts agree that one thing is clear: the world is entering into an era of lower oil prices that the group is almost powerless to change.

This new energy paradigm may result in oil trading at much lower levels than the $100 (£64) per barrel that consumers have grown used to paying over the last decade and reshape the entire global economy.

This article appeared on The Telegraph's website at 1 p.m. GMT on Saturday---and it's another contribution from reader B.V.

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China ready to cut rates again on fears of deflation, sources tell Reuters

China's leadership and central bank are ready to cut interest rates again and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making.

Friday's surprise cut in rates, the first in more than two years, reflects a change of course by Beijing and the central bank, which had persisted with modest stimulus measures before finally deciding last week that a bold monetary policy step was required to stabilize the world's second-largest economy.

Economic growth has slowed to 7.3 percent in the third quarter and policymakers feared it was on the verge of dipping below 7 percent - a rate not seen since the global financial crisis. Producer prices, charged at the factory gate, have been falling for almost three years, piling pressure on manufacturers, and consumer inflation is also weak. "Top leaders have changed their views," said a senior economist at a government think-tank involved in internal policy discussions.

This Reuters article, filed from Beijing, appeared on their Internet site at 10:49 p.m. EST on Sunday evening---and I found it posted on the gata.org Internet site.

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China's ICBC to set up offshore yuan center in Los Angeles

China's Industrial and Commercial Bank (ICBC) signed a pact with the Los Angeles city government to promote cross-border yuan trade and set up an offshore renminbi center in California, the bank said on Saturday.

The move to create an offshore RMB center in the largest state in the United States would lay the foundations for greater yuan trade with China, ICBC said in a statement.

The agreement comes at a time when many other countries are ahead of the United States in establishing cross-border trade in yuan.

This Reuters piece, filed from Beijing, was posted on their website at 3:37 a.m. EST on Saturday morning---and reader 'David in California' was the first person through the door with it on Sunday.

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Dr. Dave Janda interviews your humble scribe

Dave and I got together on Sunday afternoon over at all-talk radio WAAM-1600FM out of Ann Arbor, Michigan.  We spoke about the dire straits that the world economy is in---but most of it was about precious metals.

The audio interview posted on the davejanda.com Internet site---and it runs for about twenty-five minutes.

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Senate report shows how easily banks can rig gold, copper, and other markets

The heavy involvement of investment banks in commodity trading creates the potential for market manipulation and conflicts of interest in the gold market, and exchange-traded gold funds may be mechanisms of market manipulation contrary to the basics of supply and demand, according to the 396-page report published last week by the Permanent Subcommittee on Investigations of the U.S. Senate's Committee on Homeland Security and Governmental Affairs.

GATA's friend J.H. points out these findings on Page 38 of the report:

"Possible conflicts of interest permeate virtually every type of commodity activity. If the bank's affiliate leases an electrical power plant, the bank may attempt to use regional pricing conventions to boost its profits, even at the expense of clients that pay the higher electricity costs. If the bank's affiliate mines coal while the bank trades coal swaps, the bank may ask its affiliate to store the coal rather than sell it to help restrict supplies, and benefit from long swap positions, while causing its counterparties to incur losses. If the bank's affiliate operates a commodity-based exchange-traded fund backed by gold, the bank may ask the affiliate to release some of the gold into the marketplace and lower gold prices, so that the bank can profit from a short position in gold futures or swaps, even if some clients hold long positions.

"A fourth problem with mixing banking and commerce is that, in the context of physical commodities, it invites market manipulation and excessive speculation in commodity prices. If a bank's affiliate owns or controls a metals warehouse, oil pipeline, a coal-shipping operation, refinery, grain elevator, or exchange-traded fund backed by physical commodities, the bank has the means to affect the marginal supply of a commodity and can use those means to benefit the bank's physical or financial commodities trading positions. If a bank's affiliate controls a power plant, the bank can 'manipulate the availability of energy for advantage' or to obtain higher profits."

This commentary, along with a link to the Senate report, is posted in this GATA release from Sunday.

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Platinum and palladium shortages seen persisting

Platinum and palladium supply probably will fall short of demand for a fourth year in 2015 as more usage in vehicles helps compensate for rebounding South African mine output, according to Johnson Matthey Plc.

Platinum demand will outpace supply by 1.13 million ounces this year and palladium’s deficit will be 1.62 million ounces, according to a presentation of London-based Johnson Matthey’s platinum-group metals report. They would be the biggest shortfalls ever, based on data going back more than three decades for the metals.

A five-month mine strike that ended in June cut output from South Africa, the largest platinum producer and second-biggest for palladium. Supply shortages should continue next year partly as car demand strengthens in North America and China and stricter legislation requires more of the metals to be used in devices that curb harmful emissions.

“All things being equal, we would expect to see a good bounce back in South African supplies for both platinum and palladium,” Rupen Raithatha, research manager at Johnson Matthey, said by phone from Royston, England before the company presented the data today. “The auto side is going to be good.”

This Bloomberg article showed up on the mineweb.com Internet site yesterday---and it's courtesy of reader U.M.  Reader B.V. sent me the same story on this from the bulliondesk.com Internet site---and it's headlined "Platinum seen in record 1.33 million oz. deficit in ’14 – Johnson Matthey".

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Gold market is manipulated, Grant Williams tells Lars Schall

Interviewed by the German financial journalist Lars Schall for Matterhorn Asset Management's Gold Switzerland, Singapore fund manager and "Things That Make You Go Hmmm..." letter editor Grant Williams says there's no doubt that the gold market is manipulated, that the only question is how much, and that because of central bank intervention there's not much left to free markets.

Schall and Williams cover other subjects, including the nature of money, the abuse of money creation and credit, the likelihood of returning to a gold standard, and the Swiss Gold Initiative. The interview is an hour long and can be heard at the goldswitzerland.com Internet site.

I thank Chris Powell for wordsmithing the above paragraphs of introduction---and I must admit that I haven't had the time to listen to it.

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Goldcore: 122 Tonnes of Gold Secretly Repatriated to Netherlands

As the debate regarding whether or not Switzerland should keep the bulk of its gold reserves at home on Swiss soil reaches it's climax - the referendum takes place on Sunday - it is telling that the Dutch announced on Friday that they have just secretly repatriated 122 tonnes of their sovereign gold reserves from New York back to Amsterdam.

The repatriation movement has been driven by suspicion that the Federal Reserve and other central banks may have leased or sold gold it was holding on behalf of other countries to bullion banks and that this gold may have been used in order to suppress the price of gold in recent years.  Bizarrely, the Federal Reserve’s gold holdings have not been audited in over 50 years.

Questions are already being asked about how the Dutch were able to repatriate such a sizeable volume of gold when Germany's request was brushed aside. It may be that by taking a discreet approach the Dutch allowed the Federal Reserve room to manoeuvre - allowing them to harvest the metal from the open market. Skeptical analysts have suggested that the fall in the ETF gold holdings may have come in handy for the New York Federal Reserve.

Although the German Central Bank has stated that it trusts the Americans as custodians of it's gold reserves - despite being denied access to vaults in New York to view their own gold - the campaign for repatriation of Germany’s gold remains strong.

This must read commentary by Mark O'Byrne appeared on the goldcore.com Internet site on Monday.

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Deutsche Bank's Modest Proposal to Central Banks: "Purchase the Gold Held by Private Households"

From Deutsche bank Behavioral Finance: Daily Metals Outlook

Although gold market operators are currently preoccupied with the prospect of the SNB finding itself obliged by referendum to buy large quantities of bullion, another central bank raised the same possibility yesterday: the ECB. As odd as it sounds, given the contentious internal debate this year over asset purchases in general, ECB board member, Yves Mersch, reminded journalists that the Bank could in theory buy any asset within a QE program. This could mean government debt, equities, ETFs, or even gold. Indeed, within an effective asset purchase program it matters not so much what the asset is, than who the seller is. Given that the eurozone banking system still appears to be a bottleneck in the monetary transmission mechanism, there might be some wisdom in bypassing it. Banks do not hold gold. However, this ‘theoretical’ possibility would quickly run into practical constraints, not least the volume limitations and the problem of having to pick winners and losers.

However, the idea of gold purchases has merit because of the possible sellers. Much gold is held in private households, especially in countries like Germany. In some cases these are unwanted remnants of crisis-driven investments five years ago. A program that targeted these holdings would liberate dormant liquidity, some of which might even flow into consumption.

This very interesting article appeared on the Zero Hedge website at 3:19 p.m. EST on Monday afternoon---and I thank reader 'David in California' for sending it our way.

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Ukraine Central Bank Admits Gold Outflow, Calls It "Optimization of Reserve Structure"

A week after we reported that the head of the Ukraine central bank admitted in an unofficial, informal interview that Ukraine's gold is gone, all gone, moments ago the Central Bank revealed that, sure enough, the gold holdings in the civil war-torn country have tumbled, as a result of a decision in September to "increase the share of U.S. dollars in a reserve basket", or in other words, to sell the gold. Just don't call it that: in fact, as of today we have a brand new buzzword for gold liquidations: "optimization of international reserves."

From the central bank:  National Bank of Ukraine has optimized the structure of international reserves. This is due to timing structure of international reserves and the external position of the country. National Bank of Ukraine decided in September 2014 to increase the share of U.S. dollar in a reserve basket, because the structure of the trade balance of the country is 70.3% in US dollars, 15% in euros. 77.7% of gross foreign debt denominated in Ukraine USD in EUR - 11.2% in SDR - 5.8%.

Recently, there was a significant volatility in global currency markets associated with the strengthening of the US dollar against other world currencies. Therefore, the National Bank of Ukraine decided to reduce the share of gold in foreign exchange reserves to 8%. To this end, the international markets has sold 0.46 million. Troy ounces of gold in US dollars, respectively proportion of gold in international reserves declined to 7.9%.

It appears from this story the Ukraine's central bank that they didn't sell all their gold.  This news item put in an appearance on the Zero Hedge website at 10:16 a.m. EST on Monday morning---and reader M.A. was the first person through the door with it.

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Swiss Gold "Fire and Smoke" - "Sermons On the Mount" and "Sorcerers Apprentices"

Central bankers reached a new low overnight when Swiss National Bank President Thomas Jordan warned of "disastrous consequences" from a pulpit in a church on a historic hill in the town of Uster, Switzerland.

“The initiative is dangerous because it would weaken the SNB,” he said yesterday regarding proposals to increase the Swiss gold reserves, at a memorial service in a church which Bloomberg dubbed the 'sermon on the hill.'

The separation of church and state was one of the great achievement of recent years. It looks like we need to see a proper separation of central banking from the state. States and sovereign nations should be in control of central banks, rather than the other way around.

Central bankers and their dogmatic Keynesian money printing creed would like to see themselves and their policies as infallible. Despite, such policies having an abysmal track record throughout history and indeed in recent years.

Banks are turning out to be like lawyers.  What won't they stoop to if they have to???  It reminds me of the joke about what the difference was between a lawyer and rat---and the answer was that "there are some things that rats just won't do." This Zero Hedge piece appeared on their website at 4:51 p.m. EST on Monday---and I thank reader Harry Grant for pointing it out.  It's worth reading.

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The Swiss Referendum on Gold: What’s Missing From the Debate

The Swiss will vote on a referendum on November 30th that would ban the Swiss National Bank (SNB) from selling current and future gold reserves, repatriate foreign stored gold holdings to Switzerland, and mandate that gold must comprise a minimum of 20% of central bank assets. The SNB does not usually comment on political referendums. However, in this case it has done so quite vocally.

Why has the central bank decided to step into the political fray and oppose this initiative? What are its concerns? Are they valid or motivated by other factors?

The SNB’s primary objections to the gold initiative are three fold. 1) It claims that gold is “one of the most volatile and riskiest investments”, 2) that a 20% gold requirement will lower the “distributions to the confederation and the cantons” since gold does not pay interest like bonds and dividend paying stocks, and 3) that the 20% gold holding requirement will interfere with its ability to conduct monetary policy and complicate efforts to maintain “the minimum exchange rate”, the “temporary” policy of pegging the Swiss franc (CHF) to the Euro (EUR) it initiated in 2011 and continues to enforce to this day.

The first two concerns can quickly be addressed and discounted. Gold is indeed a volatile asset at times but so are bonds and equities. In recent years Greek, Spanish, Italian, Irish and other European bonds have been far more volatile than gold. The SMI, the Swiss stock index, lost over 50% of its value on two separate occasions between 2000 and 2009 while gold steadily rose at an annual rate of 8.50% over the same period.

This very thoughtful article was written by Eric Schreiber, independent asset manager, former head of commodities UBP, former head of precious metals Credit Suisse Zurich. All views expressed are his and may not reflect those of his former employers.   This falls into the absolute must read category---and appeared on the goldsilverworlds.com Internet site yesterday.

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Indian firm procures multimillion-dollar gold export order

Rajesh Exports, the leading Indian gold exporter, announced that it has bagged a massive export order from UAE-based jeweler. The company has reportedly secured an export order worth Rs 1,350 crore from Al Sultan Jewellery, UAE. According to the deal, Rajesh Exports will supply designer range of gold and diamond studded jewelry and medallions.

The order is to be executed by end-February next year. According to the company, the execution of the order will contribute significantly to the bottom line of the company. The Bangalore facility will be responsible to meet the order in time. The company expressed confidence that it will be able to complete the order well within the time frame. Incidentally, the Banglaore manufacturing facility, with a built-up area of 500,000 square feet is the world’s largest jewelry manufacturing facility.

Earlier in July this year, the company had secured an export order worth Rs 1,260 crores of designer range of gold and diamond studded jewelry and medallions from Al Jameelat Jewellery, UAE. The company had successfully executed the order within the stipulated deadline of 30 September 2014.

This gold-related article showed up on the resourceinvestor.com Internet site sometime yesterday---and it's the final offering of the day from Manitoba reader U.M.

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Koos Jansen: China's government and private gold reserves likely total 16,000 tonnes

China's government and private gold reserves likely total almost 16,000 tonnes, Bullion Star market analyst and GATA consultant Koos Jansen figures, calling attention to a Deutsche Bank report estimating that the People's Bank of China is accumulating gold at a rate of 500 tonnes per year.

Jansen's commentary is posted at the bullionstar.com Internet site yesterday---and I found it embedded in a GATA release.

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Nov 22, 2014

Sell, Sell, Sell---The Central Bank Madmen Are Raging

The global financial system has come unglued. Everywhere the real world evidence points to cooling growth, faltering investment, slowing trade, vast excess industrial capacity, peak private debt, public fiscal exhaustion, currency wars, intensified politico-military conflict and an unprecedented disconnect between debt-saturated real economies and irrationally exuberant financial markets.

Yet overnight two central banks promised what amounts to more monetary heroin and, presto, the S&P 500 index jerked up to 2070. That is, the robo-traders inflated the PE multiple for S&P’s basket of US-based global companies to a nosebleed 20X their reported LTM earnings.

And those earnings surely embody a high water mark in a world where Japan is going down for the count, China’s house of cards is truly collapsing, Europe is plunging into a triple dip, and Wall Street’s spurious claim that 3% “escape velocity” has finally arrived in the US is soon to be discredited for the 5th year running. So it goes without saying that if “price discovery” actually existed in the Wall Street casino, the capitalization rate on these blatantly engineered earnings (i.e., inflated EPS owing to massive buybacks) would be decidedly less exuberant.

In truth, nothing has changed about the precarious state of the world since yesterday. Except… except the Great Bloviator at the ECB made another fatuous and undeliverable promise—this time that he would do whatever he “must to raise inflation and inflation expectations as fast as possible”; and, at nearly the same hour, the desperate comrades in Beijing administered another sharp poke in the eye to China’s savers by lowering the deposit rate to by 25 bps to 2.75%.

David Stockman goes supernova in this article that appeared on his website yesterday sometime---and today's first offering is courtesy of Roy Stephens.

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Jim Rickards: Why a US Rate Hike in 2015 Is Unlikely

Jim Rickards, chief global atrategist at West Shore Funds, says the US economy is still seeing below-trend growth and remains too weak to support an interest rate increase. Jim is also on record as saying that interest rates will never rise again.

This 3:32-minute CNBC video clip was posted on their Web site at 9:20 p.m. EST on Thursday evening---and it's courtesy of Harold Jacobsen.

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Doug Noland: Memories - of 2012 and 2007

At the “Core of the Core,” historic market euphoria has pushed excess in U.S. equities and corporate Credit to precarious extremes (relative to rapidly deteriorating global financial and economic fundamentals). Concerted global central bank stimulus measures have exacerbated the divergence between inflated securities prices and deflating prospects for global growth and profits. Worse yet, the redistribution of wealth that accompanies the policy-induced inflation of the “Global Financial Sphere” is worsening already alarming geopolitical tensions. Global central banking and “risk free” government debt are at risk of being discredited.

Why would I contemplate that central bank measures might be losing ability to keep the global Bubble afloat? Over recent weeks we’ve seen the concerted efforts of team Yellen, Draghi, Kuroda and the PBOC have minimal impact on the fragile “Periphery.” Even Friday, on the back of Draghi and the Chinese, crude oil gave back much of an earlier 2.6% gain to close the week up only 69 cents. The Goldman Sachs Commodities index was only slightly positive for the week near multi-year lows. Curiously, Italian CDS increased added a basis point this week. Greek CDS traded to a 13-month high Thursday. Eastern European currencies traded down again this week. Data out of Europe has been just dreadful. Ukraine looks dangerous.

The Mexican peso declined 60 bps this week, trading at the lowest level versus the dollar since the summer of 2012. Mexico succumbing to EM contagion would be a major development. Meanwhile, here at the Bubble’s “Core,” this week saw the S&P Homebuilding Index jump 3.9% and the Morgan Stanley Retail Index rise 2.1% (to a record high). Yet there were a few interesting Bloomberg headlines: “Riskiest Junk Borrowers Imperiled as Yields Jump…;” “Munis Facing First Losses of 2014 as Record Win Streak Imperiled;” “Corporate Bond Spread Versus Treasuries Widens to Most in 2014;” “Bond Record in Sight as Sales Near $4 Trillion.” Now that’s something to ponder: A record $4.0 TN of international corporate bond issuance in the face of a faltering global Bubble. Like many things these days, it brings back (bad) memories of 2007.

Doug's Credit Bubble Bulletin was posted on the prudentbear.com Internet site late on Friday evening---and it's always a must read. I found this item on my own before reader U.D. could send it to me.

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Widespread Flooding Ahead for Snowy Western New York: Officials

Warm temperatures and rain were forecast for the weekend in the city of Buffalo and western New York, bringing the threat of widespread flooding to the region bound for days by deep snow.

Areas where several feet of snow fell this week should brace for significant, widespread flooding, the National Weather Service warned on Friday.

Swept by lake effect storms, parts of western New York including Buffalo, received as much as seven feet (2 meters) of snow, an amount equal to a year's worth of accumulation for the region. Such storms occur when cold air moves across warmer Great Lake waters and can dump heavy snowfall when they hit land.

This Reuters article appeared on their Web site at 12:19 p.m. EST on Friday---and it's the second offering of the day from Roy Stephens.

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Bank of England Probes Whether Staff Helped Rig Money Auctions

The Bank of England has opened a formal investigation into whether its officials knew of -- and even facilitated -- the possible manipulation of auctions designed to inject money into the credit markets to alleviate the financial crisis.

The probe, which started in the summer, has been revealed just a week after the U.K. central bank published a report that criticised its own response to the foreign exchange rigging scandal.

The rest of this Financial Times story is subscriber protected---and I found it in a GATA release yesterday.

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The Siege of Julian Assange Is a Farce

The siege of Knightsbridge is a farce. For two years, an exaggerated, costly police presence around the Ecuadorean embassy in London has served no purpose other than to flaunt the power of the state. Their quarry is an Australian charged with no crime, a refugee from gross injustice whose only security is the room given him by a brave South American country. His true crime is to have initiated a wave of truth-telling in an era of lies, cynicism and war.

The persecution of Julian Assange must end. Even the British government clearly believes it must end. On October 28, the deputy foreign minister, Hugo Swire, told Parliament he would "actively welcome" the Swedish prosecutor in London and "we would do absolutely everything to facilitate that". The tone was impatient.

The Swedish prosecutor, Marianne Ny, has refused to come to London to question Assange about allegations of sexual misconduct in Stockholm in 2010 - even though Swedish law allows for it and the procedure is routine for Sweden and the U.K. The documentary evidence of a threat to Assange's life and freedom from the United States - should he leave the embassy - is overwhelming. On May 14 this year, U.S. court files revealed that a "multi subject investigation" against Assange was "active and ongoing".

This essay by John Pilger was posted on the Asia Times Web site on Monday---and I thank UK reader Tariq Khan for sending it.  For obvious reasons, it had to wait for today's column.

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Dutch Had Euro-Exit Plan at Height of Crisis

Details have emerged indicating that both the Dutch and German governments were preparing emergency plans for a return to their national currencies at the height of the euro crisis.

In early 2012, a few months after the then Greek prime minister Georgios Papandreou and his Italian counterpart Silvio Berlusconi had resigned, the Dutch finance ministry prepared for a scenario in which the Netherlands could return to its former currency.

Dutch TV documentary programme Argos Medialogica reported on Tuesday (18 November), based on anonymous sources, that the ministry had an emergency plan called Florijn, a reference the original name of the guilder, the Netherlands' pre-euro coin.

Current finance minister Jeroen Dijsselbloem also confirmed the existence of the plan on Tuesday in his weekly interview with RTLZ.

This very interesting article was posted on the euobserver.com Internet site at 9:53 a.m. Europe time on their Friday morning---and it's another offering from Roy Stephens.

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Draghi Throws ECB Door Open to Money Printing as Global Prospects Dim

European Central Bank President Mario Draghi threw the door wide open on Friday for more drastic measures to prevent the euro zone from sliding into deflation, promising to use whatever means necessary as China also acted to boost its sagging economic growth.

With many fearing the euro zone could be heading for a Japanese-style lost decade of deflation and recession, Draghi's remarks were reminiscent of when he pulled the bloc back from possible disintegration in 2012 by promising to do "whatever it takes" to back the common currency.

Painting a bleak picture of the state of the 18 countries in the euro bloc, Draghi stressed that "excessively low" inflation had to be raised quickly.

In a blunt message, he said there was now no sign of improvement in the months ahead and the ECB would pump more money into the euro bloc if its current measures fell short.

This Reuters piece, filed from Frankfurt at 2:35 p.m. EST yesterday, is courtesy of West Virginia reader Elliot Simon---and it's definitely worth reading.

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Poroshenko Gets Booed During Wreath-Laying at ‘Heavenly Hundred’ Memorial

On Friday activists booed Ukraine’s President Petro Poroshenko as he attended a wreath-laying ceremony at the ‘heavenly hundred’ memorial erected on Institutskaya Street in Kiev.

This Friday Ukraine celebrates the one-year anniversary of the beginning of the pro-Eurointegration protests last year that culminated in a putsch which ousted President Viktor Yanukovich. The people killed during the protests on Institutskaya Street were nicknamed “the heavenly hundred.” US Vice President Joe Biden, who is in Kiev to discuss offering assistance to Ukraine, was slated to participate in the ceremony but changed plans at the last minute. Biden is only the last in a series of US officials who went out of their way to show support for the protesters and the regime that they subsequently installed.

“Shame [on you]!”, “You’re awarding our heroes posthumously!” chanted the crowd that assembled on Friday, which included some of the relatives of the dead. One of the activists pointed out that those wounded during the February clashes at Maidan Square didn’t receive the special status that would’ve provided them with free access to the social and medical assistance they require.

Poroshenko made an attempt to calm the crowd but failed, and was forced to leave the ceremony amid the angry shouting.

This news item, filed from Moscow, appeared on the sputniknews.com Internet site at 3:31 p.m. Moscow time yesterday afternoon---with was 7:31 a.m. EST.  I thank Roy Stephens for sending it.  The france24.com Internet site carried a similar story on Friday.  It was headlined "Ukraine’s Poroshenko heckled at anniversary of Kiev protest"---and it's courtesy of South African reader B.V.

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US Congress to Pressure for Lethal Military Aid to Ukraine: Senator McCain

The newly elected U.S. Congress will pass resolutions and apply pressure to U.S. President Barack Obama to provide Ukraine with lethal military assistance, U.S. Senator John McCain told Sputnik news in a Friday interview.

"We [Congress] will be talking a lot about it. We will pass resolutions. We will put every amount of pressure we can on this recalcitrant administration," McCain said when asked about the Obama administration's ongoing refusal to provide lethal military aid to the government in Kiev.

The Senator, who is expected to assume the chairmanship of the Senate Armed Services Committee in 2015, does not know whether the efforts by Congress will be successful.

Whether the issue creates a major clash between the executive and legislative branches of the US government will "depend on whether they [the Obama administration] will see reality or not," McCain said.

This story, filed from Washington, was posted on the sputniknews.com Internet site at 7:31 p.m. EST on Friday evening---and it's another offering from Roy Stephens.

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Russia Warns US Against Supplying ‘Lethal Defensive Aid’ to Ukraine

Moscow has warned Washington a potential policy shift from supplying Kiev with “non-lethal aid” to “defensive lethal weapons”, mulled as US Vice President visits Ukraine, would be a direct violation of all international agreements.

A Russian Foreign Ministry spokesperson said that reports of possible deliveries of American “defensive weapons” to Ukraine would be viewed by Russia as a “very serious signal.”

“We heard repeated confirmations from the [US] administration, that it only supplies non-lethal aid to Ukraine. If there is a change of this policy, then we are talking about a serious destabilizing factor which could seriously affect the balance of power in the region,” Russian Foreign Ministry spokesman Aleksandr Lukashevich cautioned.

This news item was posted on the Russia Today Internet site at three minutes after midnight on Friday morning in Moscow---and I thank reader M.A. for his first contribution of the day.

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John Batchelor Interviews Stephen F. Cohen on the Crisis in Ukraine

Few people in the world are more qualified to speak about the Ukraine and Russia than Stephen F. Cohen, NYU and Princeton professor Emeritus.

This 39:45-minute audio interview was posted on the johnbatchelorshow.com Internet site on Tuesday---and for length and content reasons, had to wait for today's column.  I thank Larry Galearis for bringing it to our attention.  It's worth your while if you have the time---and interest.

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Russia Signs Deal with Ukraine to Deliver Nuclear Fuel for 2015: Rosatom

Russia has signed a contract with Ukraine to deliver nuclear fuel for the country's nuclear energy plants in 2015, the head of Russian nuclear agency Rosatom said Friday.

"A contract for 2015 has been signed to deliver fuel for Ukraine's nuclear energy facilities," Sergei Kirienko said in a speech before a student assembly in Moscow.

The head of the Russian nuclear agency stressed that supplies of nuclear fuel to Ukraine had not been held up even once and shipments have been delivered to Ukraine as scheduled.

In September, Ukraine gave the green light to its nuclear power plants to receive supplies of upgraded nuclear fuel from the U.S. company Westinghouse, a move criticized by Rosatom as a political one.

Well, I sure hope the Russian company is getting paid up front for this, as I wouldn't want to extend a nickel's worth of credit to Ukraine right now.  This article appeared on the sputniknews.com Web site at 2:24 p.m. Moscow time on their Friday afternoon, which was 6:24 a.m. EST.  It's courtesy of reader M.A., for which I thank him.

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Pepe Escobar: Washington Plays Russian Roulette

These are bleak times. I've been in serious conversation with some deep sources and interlocutors - those who know but don't need to show off, privileging discretion. They are all deeply worried. This is what one of them, a New York strategic planner, sent me:

The propaganda attack against Putin equating him with Hitler is so extreme that you have to think that the Russians cannot believe their ears and cannot trust the United States anymore under any circumstances.

I cannot believe how we could have gotten ourselves into this situation to protect the looters in the Ukraine that Putin would have rid the Ukraine of, and even had the gall to place in a leadership role one of the worst of the thieves. But that is history. What is certain is that MAD [mutually assured destruction] is not a deterrent today when both sides believe the other will use nuclear weapons once they have the advantage and that the side that gains a decisive advantage will use them. MAD is now over.

That may sound somewhat extreme - but it's a perfectly logical extension, further on down the road, of what the Russian president intimated in his already legendary interview with Germany's ARD in Vladivostok last week: the West is provoking Russia into a new Cold War.

This absolute must-read commentary by Pepe was posted on the Asia Times Web site yesterday sometime---and the first person through the door with this essay was reader M.A.

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Serbia Won’t Join Anti-Russian Sanctions Club Despite EU Pressure - Nikolic

Serbia is not planning to impose sanctions on Russia, said its President Tomislav Nikolic after meeting E.U. Commissioner Johannes Hahn. The latter said the EU expects Serbia to bring its policy in line with the European one if it seeks to enter the union.

Nikolic said that Serbia is not planning to introduce sanctions at the moment, though admitting the country is seeking E.U. membership which implies an obligation to pursue common policies, including foreign.

"What I heard from Hahn is the same what you have heard from him: Serbia is not an E.U. member and it can be independent in pursuing its foreign policy; but E.U. membership would have implied a commitment to pursue a common foreign policy," the President said at a media conference after talks with Hahn, E.U. Commissioner for Enlargement and Good-Neighbourly Relations visiting Belgrade on Thursday.

This is a follow-up story to the one I posted about this subject in yesterday's column.  It appeared on the Russia Today Web site at 7:40 p.m. Thursday evening Moscow time---and I thank reader M.A. for digging it up for us.

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In a Shift, Obama Extends US Role in Afghan Combat

President Obama decided in recent weeks to authorize a more expansive mission for the military in Afghanistan in 2015 than originally planned, a move that ensures American troops will have a direct role in fighting in the war-ravaged country for at least another year.

Mr. Obama’s order allows American forces to carry out missions against the Taliban and other militant groups threatening American troops or the Afghan government, a broader mission than the president described to the public earlier this year, according to several administration, military and congressional officials with knowledge of the decision. The new authorization also allows American jets, bombers and drones to support Afghan troops on combat missions.

In an announcement in the White House Rose Garden in May, Mr. Obama said that the American military would have no combat role in Afghanistan next year, and that the missions for the 9,800 troops remaining in the country would be limited to training Afghan forces and to hunting the “remnants of Al Qaeda.”

The decision to change that mission was the result of a lengthy and heated debate that laid bare the tension inside the Obama administration between two often-competing imperatives: the promise Mr. Obama made to end the war in Afghanistan, versus the demands of the Pentagon that American troops be able to successfully fulfill their remaining missions in the country.

Since this story appeared on the New York Times Web site, I'm not sure how much of this is real---and how much is made up---so if you decide to read it, do so with an open mind.  I thank Roy Stephens for sending it to me late yesterday evening.

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Russia and China: Akin to Porcupines Mating

That was how the slow and careful rapprochement between Russia and China has been described by Eric Margolis, one of my favorite geopolitical writers.

US shenanigans in Eastern Europe and the East China Sea—fomenting so-called colored revolutions in Ukraine and Georgia (both on Russia’s periphery) and egging on China’s neighbors to make aggressive territorial claims—have pushed the Russian bear and Chinese dragon together. In May, the two uneasy neighbors reached a de facto alliance represented by a 20-year, $400 billion deal for Russia to supply China with natural gas.

A Russia/China alliance shifts the Earth’s geopolitical axis. Historians may look back at the energy deal as the moment the post-Cold War era and the US’s singular position came to an end. The Russia/China team is now a consequential economic and military counterweight to the US. It will operate as an attractant for every country and every faction that for any reason resents the US’s giant footprint in world affairs.

This short, but worthwhile commentary appeared on the International Man Web site the other day.

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Futures Soar on Surprise Chinese Rate Cut

Moments ago, as traditionally is the case, the Chinese central bank caught the world by surprise and cut rates, notably the deposit rate by 25 bps and the lending rate by 40 while allowing banks to offer interest of 1.2 times the benchmark rate.

This happens as many analysts had been calling for more easing from China for months to help stabilize the faltering economy, but also happens a day after as Bloomberg reported, "Distressed Debt in China? Ain’t Seen Nothing, DAC Says." Basically well over a year after promising deleveraging reforms and a lower trend line growth rate, one which would not see incremental monetary stimulus, Xi Jinping threw in the towel and joined Japan and Europe in aggressively pursuing greener pastures.

It also means that, as expected, China is now clearly paying attention to Japan's unprecedented currency destruction and as Albert Edwards noted a few weeks ago, now that China has finally broken the seal, it is only a matter of time before China also devalues its currency outright.

This Zero Hedge article from early Friday morning EST is definitely worth your while---and I thank reader M.A. for his final contribution to today's column.

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China Building South China Sea Island Big Enough for Airstrip: Report

Satellite images show China is building an island on a reef in the disputed Spratly Islands large enough to accommodate what could be its first offshore airstrip in the South China Sea, a leading defense publication said on Friday.

The construction has stoked concern that China may be converting disputed territory in the mineral-rich archipelago into military installations, adding to tensions waters also claimed by Taiwan, Malaysia, the Philippines, Vietnam and Brunei.

IHS Jane's said images it had obtained showed the Chinese-built island on the Fiery Cross Reef to be at least 3,000 meters (1.9 miles) long and 200-300 meters (660-980 ft) wide, which it noted is "large enough to construct a runway and apron."

The building work flies in the face of U.S. calls for a freeze in provocative activity in the South China Sea, one of Asia's biggest security issues. Concern is growing about an escalation in disputes even as claimants work to establish a code of conduct to resolve them.

This Reuters article, filed from Washington, showed up on their Web site at 3:20 p.m. EST on Friday---and it's the final contribution of the day from Roy Stephens---and I thank him on your behalf.

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The Fall of the Roman Republic

In 133 B.C., Rome was a democracy.  Little more than a hundred years later it was governed by an emperor. This imperial system has become, for us, a by-word for autocracy and the arbitrary exercise of power.

At the end of the second century B.C. the Roman people was sovereign. True, rich aristocrats dominated politics. In order to become one of the annually elected 'magistrates' (who in Rome were concerned with all aspects of government, not merely the law) a man had to be very rich.

Even the system of voting was weighted to give more influence to the votes of the wealthy. Yet ultimate power lay with the Roman people. Mass assemblies elected the magistrates, made the laws and took major state decisions. Rome prided itself on being a 'free republic' and centuries later was the political model for the founding fathers of the United States.

By 14 A.D., when the first emperor Augustus died, popular elections had all but disappeared. Power was located not in the old republican assembly place of the forum, but in the imperial palace. The assumption was that Augustus's heirs would inherit his rule over the Roman world - and so they did.

This was nothing short of a revolution, brought about through a century of constant civil strife, and sometimes open warfare. This ended when Augustus - 'Octavian' as he was then called - finally defeated his last remaining rivals Mark Antony and Cleopatra in 31 B.C. and established himself on the throne. Why did this revolution happen?

This very interesting history lesson from 2,000 years ago when laid over what's happening in the U.S., is pretty stark.  It's posted on the bbc.co.uk Internet site---and I lifted it from yesterday's edition of the King Report.  Another history lesson for the same period is also one that I also borrowed from yesterday's King Report and it's linked here.  In some respects, it's a better story than the one I've posted above.

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'Immoral but Not Illegal': Metal Warehousing Games in the Spotlight

Complex deals employed by Goldman Sachs' metals storage unit to build vast stockpiles and then maintain queues test the spirit of the London Metal Exchange operating code, shocking many traders and confirming others' suspicions.

But the intricate transactions that saw Metro International Trade Services shell out millions of dollars to customers to join exit queues to bolster rental income was within the rules, according to two senior warehousing executives and two veteran traders.

An explosive U.S. Senate report released on Wednesday revealed the "imaginative" methods used to lure millions of tons of aluminum into Detroit, Metro's headquarters, and then keep it there over the past four years.

You know that if either G.S. or JPM is involved, it's "immoral, but not illegal"---and in some cases its both.  The disturbing must-read article appeared on the Reuters Web site at 4:23 a.m. EST on Friday morning---and I found it on the gata.org Internet site.

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Citing Risks, Fed May Limit Wall Street Role in Commodities

The Federal Reserve may curtail Wall Street commodity businesses after lawmakers said banks' role in energy, power, and metals markets spurred unfair trading advantages and could threaten financial stability.

At a Senate hearing today, Fed Governor Daniel Tarullo said curbs under consideration include ownership limits, restricting how much revenue can be derived from commodities, and requiring Wall Street firms to boost capital. He said the new rules, to be proposed early next year, could restrict banks from investing in oil tankers, coal mines, and other businesses involved in physical commodities.

"We are focusing on the risk to safety and soundness presented by specific activities and on whether those risks can be appropriately and adequately mitigated," Tarullo said at the hearing held by the Senate Permanent Subcommittee on Investigations.

This Bloomberg news item, filed from Washington, was posted on their Web site at 10:40 a.m. Denver time yesterday morning---and I found it embedded in a GATA release.

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Sprott Money Weekly Wrap-Up with Eric Sprott

Eric talks about the Surge in Asian Investment Gold Demand, the Positive Movement in Physical Gold Demand Around the World, and the Possible Impact of the Swiss Referendum on the Physical Gold Market.

This 9:32-minute audio interview conducted by Jeff Rutherford was posted on the sprottmoney.com Internet site on Friday.

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Financial Times' Gillian Tett Notes Greenspan's Renewed Endorsement of Gold

A decade ago, when Alan Greenspan was chairman of the mighty Federal Reserve, he was infamous for delivering ambiguous, Delphic speeches that nobody could understand. No longer. I recently had a chance to interview Greenspan, 88, at the Council on Foreign Relations, regarding an updated version of his latest book.

These days the retired Greenspan speaks so clearly that some of his words are still ricocheting around the blogosphere. For what he revealed on the CFR platform was that he harbours considerable doubts about whether recent Western monetary policy experiments have actually helped economic growth. He also fears that such experiments have been so wild that it will be very hard to exit from these policies in the future -- in the U.S. or anywhere else -- without sparking huge market volatility.

Indeed, Greenspan is so worried about future turbulence that he apparently sympathises with investors (and central banks) who are stocking up on gold.

Unfortunately, unless you're plugged into the Financial Times website, which is free if you only read a couple of articles a month, the balance of this story is subscriber protected.  There's nothing new in here, of course, as what Greenspan said at the Council on Foreign Relations is already well known---and I certainly covered it in this column.  What is interesting is that Gillian Tett, who is as Establishment as you can get, wrote this in the Financial Times of London on Friday.  So, from that perspective, it's a big deal---and wouldn't have shown up there without the approval of the senior editor.  This is another gold-related news item that I found at the gata.org Web site yesterday---and the actual FT headline reads "Gold: Worth Its Weight?"

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Ronan Manly: Swiss Gold Vote Likely Tighter Than Polls Suggest

GoldCore analyst and GATA consultant Ronan Manly provides a detailed analysis of the opinion polls that seem to be moving against the Swiss Gold Initiative, and he raises a compelling question: While the Swiss National Bank complains that the initiative would severely limit its monetary policy options, the initiative gives the bank five years for compliance, so just how long does the bank intend to chain the Swiss franc to a depreciating euro?

Manly's commentary is headlined "Swiss Gold Vote Likely Tighter than Polls Suggest"---and it's posted at the goldcore.com Internet site.  It's on the longish side, dear reader, but definitely worth reading if you have the time---and/or the interest.  I thank Chris Powell for wordsmithing "all of the above."

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Sprott's Thoughts: Paul Wilson, CEO, World Platinum Investment Council

Paul Wilson recently took up the role of Chief Executive Officer at the newly created World Platinum Investment Council (WPIC). The Council was launched by a group of six platinum producers in South Africa, in order to further develop the global market for platinum investment.

Readers may know that our affiliate Sprott Asset Management LP manages one of the largest above-ground stockpiles of platinum in the world, in the form of the Sprott Platinum and Palladium Trust (NYSE: SPPP).

What will the World Platinum Investment Council do? Their CEO Paul Wilson was kind enough to call me up and tell me what it’s all about.

This very interesting 'interview' appeared on the sprottglobal.com Internet site yesterday---and it was  'conducted' by Henry Bonner.  Of course the obvious reason that platinum prices are not rising is because its price is being managed like the other three precious metals.  I read this commentary---and that crucial fact is nowhere to be found.  Either the question was never asked, or the information wasn't volunteered.  How typical.

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MMTC-PAMP India Awaiting Government Nod for Gold Metal Scheme

In a move which will it hopes will in some way help resolve India’s 'insatiable appetite’ for gold and the attendant problems with the high current account deficit (CAD), MMTC-PAMP, a 27:73 per cent joint venture between India’s largest bullion importer MMTC and Swiss PAMP SA, is ready with its gold metal account scheme to mobilize gold from small consumers who account for a bulk of gold demand.

The minimum deposit will be around 50 grams of gold and that will address more than 90 per cent of gold consumers in India, Rajesh Khosla, managing director, MMTC-PAMP India told this correspondent.

The scheme would help small retail gold consumers, deposit their gold, melt it and earn interest on it and accrue gold instead of rupees in the account at the time of maturity. On the implementation of the scheme, Mr. Khosla said the Reserve Bank of India (RBI) would submit its views in early December after which the government would take a call on the scheme.

Well, 'scheme' is the operative word in this story---as Manitoba reader U.M. carefully pointed out when she sent me this article yesterday.  Filed from Mumbai, it was posted on thehindu.com Internet site at 7:53 p.m. IST on their Friday evening.

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Indian Central Bank Cautious on Response to Gold Import Surge

The Reserve Bank of India, grappling with a surge in gold imports last month, could support some restrictions for trading houses but two senior policymakers involved in the bank's decision-making said officials were also wary of overreacting. 

A senior finance ministry source told Reuters on Tuesday the country would soon announce measures set to center on import restrictions for private trading house that were eased earlier this year. Private jewellery exporters account for the bulk of demand for gold.

But the country has yet to announce any steps, and the two policymakers said on Friday there was no agreement yet. "No decision has yet been taken on curbing gold imports," said one of the policy makers, who declined to be named.

This Reuters article, also filed from Mumbai, showed up on their Web site at 7:51 p.m. IST on their Friday evening---and it's another gold-related story I found on the gata.org Internet site.

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Nov 21, 2014

New Scrutiny of Goldman’s Ties to the New York Fed After a Leak

From his desk in Lower Manhattan, a banker at Goldman Sachs thumbed through confidential documents — courtesy of a source inside the United States government.

The banker came to Goldman through the so-called revolving door, the symbolic portal that connects financial regulators to Wall Street. He joined in July after spending seven years as a regulator at the Federal Reserve Bank of New York, the government’s front line in overseeing the financial industry. He received the confidential information, lawyers briefed on the matter suspect, from a former colleague who was still working at the New York Fed.

The previously unreported leak, recounted in interviews with the lawyers briefed on the matter who spoke anonymously because the episode is not public, illustrates the blurred lines between Wall Street and the government — and the potential conflicts of interest that can result. When Goldman hired the former New York Fed regulator, who is 29, it assigned him to advise the same type of banks that he once policed. And the banker obtained confidential information, along with several publicly available facts, in the course of assignments from his bosses at Goldman, the lawyers said.

This news item appeared on The New York Times website at 9:10 p.m. EST on Wednesday evening---and I found it embedded in a GATA release yesterday morning.  It's worth reading.

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A Quick Look at Goldman's Takeover of the U.S. Judicial System: N.Y. Fed Edition

Moments ago, in the aftermath of the latest scandal involving Goldman's Rohit Bansal getting material information from a NY Fed employee, finally admitted that the original Carmen Segarra "whistleblower" allegations, namely that there was a material weakness (as in it is non-existent) when it comes to the NY Fed's supervision of TBTF banks, by which we mean Goldman Sachs here, were founded and valid when at 4pm on the dot the NY Fed released this:

The Federal Reserve Board on Thursday announced two separate reviews that are underway at the Federal Reserve System to ensure that the examinations of large banking organizations are consistent, sound, and supported by all relevant information.

This Zero Hedge commentary from yesterday is worth your while as well---and it showed up on their Internet site at 4:43 p.m. yesterday afternoon EST---and I thank Washington state reader S.A. for sending it.  There was a similar story in the Financial Times which I found in a GATA release yesterday.  It's headlined "On the night before hearing, Fed asks if it's too much the tool of investment banks".

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Here we go again: More snow for buried N.Y.

Upstate New York is about to be inundated, again, with something chilling: Snow. Meteorologists are predicting another three feet on top of the five-feet-plus already burying Buffalo.

Gov. Andrew Cuomo is calling the early-season snow that has blanketed northern New York and killed seven people a "historic event" that's bound to break records. Deaths have also been reported in Maine, Michigan and elsewhere in the U.S., bringing the toll so far linked to the extreme weather to 20.

Some Buffalo-area residents have been trapped in their snow-bound cars or homes for almost two days. Some 140 miles of Interstate 90, the main artery running across New York, remained closed, from Rochester to the New York-Pennsylvania state line.

This amount of snow if almost unimaginable---and  an 'historic event' it is. This story was posted on the upi.com Internet site at 4:36 a.m. EST on Thursday morning---and it's the first offering of the day from Roy Stephens.

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Wall Street Stunned as Iceland Dares to Jail Banker Involved in 2008 Crash

The impossible is possible. Never say never.

Wall Street bankers are staring agog at headlines coming from Europe where, in Iceland, the former chief executive of one of the largest banks in the country which was involved in crashing the economy in 2008 has been sentenced to jail time.

As Valuewalk reports, in receiving a one year prison sentence, Sigurjon Arnason officially became the first bank executive to be convicted of manipulating the bank’s stock price and deceiving investors, creditors and the authorities between Sept. 29 and Oct. 3, 2008, as the bank’s fortunes unwound, crashing the economy with it.

It appears he was as shocked by the verdict as Wall Street-ers are, "this sentence is a big surprise to me as I did nothing wrong."

Of course all bankers are as pure as the freshly fallen snow---and it would take no time at all to fill up the world's jails with the crooks inside the world's banking community.  This Zero Hedge article appeared on their website at 10:02 p.m. last night EST---and I thank Harry Grant for sending it our way late last night.

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American-born London mayor refuses to pay U.S. taxes, threatens to renounce citizenship

The Internal Revenue Service reportedly wants London Mayor Boris Johnson to write a check for taxes he owes to the United States government, but the UK politician says he isn’t paying.

Johnson, 50, has been the mayor of London since 2008 and is considering a bid at Parliament in the near future. In the meantime, however, he might soon find himself in hot water on the other side of the pond. Johnson, who was born in New York but moved at the age of five, told NPR host Susan Page during an interview last week that the US wants him to pay a capital gains tax owed by American citizens who earn income abroad.

Previously, Johnson wrote in a 2006 column that he was “getting a divorce from America” and would renounce his citizenship, noting “for years I have travelled exclusively on a British passport,” and not the US-issued one he also holds. That threat failed to materialize, but a question emailed to the mayor while he was being interviewed by NPR recently might have rekindled his interest — and without a doubt revealed another issue that has peculiarly pitted Johnson against the IRS.

“It is very hard but I will say this: the great United States of America does have some pretty tough rules, you know,” Johnson said. “You may not believe this but if you're an American citizen, America exercises this incredible doctrine of global taxation, so that even though tax rates in the UK are far higher and I'm Mayor of London, I pay all my tax in the UK and so I pay a much higher proportion of my income in tax, then I would if I lived in America.”

This very interesting story put in an appearance on the Russia Today website at 5:26 p.m. Moscow time on their Thursday afternoon, which was 9:26 a.m. in New York.  It's the second offering of the day from Roy Stephens.

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‘Diabolical and absurd’: Outrage as 'Save the Children' gives Tony Blair Global Legacy Award

A decision by UK charity Save the Children to give Tony Blair its annual Global Legacy Award has unleashed a torrent of criticism highlighting the former PM’s role in Britain’s 2003 Iraq war and his controversial business dealings in the Middle East.

The former Labour leader, who is currently a key focus of a public inquiry into Britain’s invasion of Iraq, received the honor on Wednesday night at a star-studded gala hosted by the charity in New York.

Save the Children’s decision to offer Blair the award has provoked outrage across the UK, with critics insisting the move utterly discredits the charity.

This article was posted on the Russia Today Internet site at 6:17 p.m. Moscow time on their Thursday evening---and once again I thank Roy Stephens for sharing it with us.

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UKIP's Reckless wins Rochester and Strood seat

UKIP has its second elected MP at Westminster after Mark Reckless won the Rochester and Strood by-election.

Mr Reckless received 16,867 votes, 2,920 more than Conservative candidate Kelly Tolhurst's 13,947, with Labour's Naushabah Khan third on 6,713.

The Green Party came fourth, while the Lib Dems got their lowest total ever.

Mr Reckless, whose defection from the Tories to UKIP triggered the contest in Kent, said: "If UKIP can win here, we can win across the country."

This news item appeared on the bbc.com Internet site at 2:42 a.m. EST this morning---and I thank Harry Grant for his second contribution to today's column.

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Dutch government refuses to reveal ‘secret deal’ into MH17 crash probe

The Dutch government has refused to reveal details of a secret pact between members of the Joint Investigation Team examining the downed Flight MH17. If the participants, including Ukraine, don’t want information to be released, it will be kept secret.

The respected Dutch publication Elsevier made a request to the Dutch Ministry of Security and Justice under the Freedom of Information Act to disclose the Joint Investigation Team (JIT) agreement, along with 16 other documents. The JIT consists of four countries - the Netherlands, Belgium, Australia and Ukraine - who are carrying out an investigation into the MH17 disaster, but not Malaysia. Malaysian Airlines, who operated the flight, has been criticized for flying through a war zone.

Part of the agreement between the four countries and the Dutch Public Prosecution Service, ensures that all these parties have the right to secrecy. This means that if any of the countries involved believe that some of the evidence may be damaging to them, they have the right to keep this secret.

“Of course [it is] an incredible situation: how can Ukraine, one of the two suspected parties, ever be offered such an agreement?” Dutch citizen Jan Fluitketel wrote in the newspaper Malaysia Today.

Wow!  You couldn't make this stuff up!  This Russia Today news item was posted on their website at 12:41 p.m. Moscow time on their Thursday afternoon---and it's courtesy of reader 'h c'.  It's worth reading.

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French Shipbuilders Float Out Second Mistral-Class Warship for Russia

Second Mistral-class amphibious assault ship built in France under contract with Russia was floated out Thursday, a RIA Novosti correspondent reported.

The helicopter carrier, named the Sevastopol, left its dry dock in the French port city of Saint-Nazaire before just a few onlookers, our correspondent noted.

Russia and France signed the $1.5 billion deal for two Mistral-class ships in June 2011. The first carrier, the Vladivostok, is expected to join the Russian Navy by the end of this year, while the Sevastopol is due to arrive in Russia in 2015.

But the deal has been in jeopardy after the West slapped Russia with economic sanctions over Ukraine. French President Francois Hollande in October threatened to suspend the deliveries of the ships, citing Russia’s alleged involvement in the Ukrainian conflict — a claim that Moscow has repeatedly denied.

This story appeared on the sputniknews.com Internet site at 8:28 p.m. yesterday evening Moscow time---and it's also courtesy of Roy Stephens.

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Polish farmers block road over Russian sanctions

Polish fruit farmers blocked a road near Annopol and in Leokadiow in Lubelskie province in the southeastern part of the country on Tuesday, calling for more support from the Polish government after being hit hard by the Russian food embargo. Protesters brought traffic to a halt, moving along a crosswalk with banners, flags and placards.

In response to European sanctions, Russia imposed a one-year import ban on fresh produce from the EU in August. Prior to the embargo, Poland accounted for about 50 percent of apple imports to the Russian market.

The above two paragraphs are all there is to this brief news item that showed up on the Russia Today website at 3:50 p.m. Moscow time on their Wednesday afternoon.  Once again I thank Roy Stephens for sending it.

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Ukraine death toll rises to more than 4,300 despite ceasefire: U.N.

The death rate in the Ukraine conflict has increased in the past eight weeks despite the declaration of a ceasefire in September, the United Nations said on Thursday.

In total, more than 4,300 combatants and civilians have been killed in eastern Ukraine since pro-Russian rebels seized border regions in April. Nearly a million people have fled the area, with a surge in the past two months, the U.N. said.

Since a formal ceasefire was agreed by Ukraine, Russia and the rebels in early September, an average of 13 soldiers, rebels, and civilians had died every day, a report by U.N. human rights monitors said.

This Reuters article, filed from Geneva, appeared on their Internet site at 9:07 a.m. EST yesterday---and it's courtesy of reader M.A.

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Former Australian PM: Expanding NATO Was A Big Mistake

Why is it that top Western leaders seem to have a tendency toward wisdom only after leaving top office?

During Putin's visit to Australia for the G20 meeting former Australian P.M. Paul Keating gave an interview to Australian TV starkly critical of NATO.

He heavily criticized the West for making a serious error in extending NATO at the end of the Cold War.

He thinks that current events are a result of that flawed decision.

This interesting article appeared on the russia-insider.com website yesterday sometime---and it's courtesy of Roy Stephens once again.

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‘Blackmail’: E.U. trying to force Serbia into Russia sanctions club, says senior M.P.

The E.U.’s attempts to coerce Serbia into joining anti-Russian sanctions are nothing but blackmail, says the head of the State Duma Foreign Affairs Committee.

Presently the European Union is trying to force Serbia, which is not an E.U. member, to join their sanctions program. They are practically blackmailing Serbia: either it joins the sanctions against Russia or [the bloc] won’t see it as a country with a chance of joining the E.U.,” M.P. Aleksey Pushkov (United Russia) told reporters at a Thursday press conference in Moscow.

The problem for Serbia is that in any case it has no prospects for joining the EU anytime soon. Even if they join the anti-Russian sanctions now, they would simply succumb to blackmailers and no one would accept them in the E.U. in one year for doing this,” he added.

The comments came after E.U.’s Enlargement Commissioner Johannes Hahn said that Serbia would have to join E.U. sanctions against Moscow if it wants to be part of the European Union.

This is another article from the Russia Today website---and this one was posted there at 10:43 a.m. Moscow time on their Thursday morning, which was 2:43 a.m. EST.  Once again I thank Roy Stephens for bringing it to our attention---and it's certainly worth reading.

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China firm signs $12 billion deal to build Nigerian railway

A state-owned Chinese company has signed a $12 billion agreement to build a railway along Nigeria's coast that it billed as China's single largest overseas contract, state media said Thursday.

China Railway Construction Corp. Ltd. (CRCC) signed the official construction contract with the Nigerian government on Wednesday in Abuja, the Xinhua news agency said.

The Nigerian railway will stretch for 1,402 kilometres (871 miles) along the coast, linking Lagos, the financial capital of Africa's largest economy and leading oil producer, and Calabar in the east, according to the report.

The $11.97 billion deal marks China's largest single overseas contract project so far, it said, citing CRCC.

This interesting article, filed from Beijing, appeared on the france24.com Internet site at 8:45 a.m. Europe time on their Thursday morning, which was 2:45 a.m. in New York.  My thanks go out to South African reader B.V. for finding it for us.

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China manufacturing index dips to six-month low: HSBC

Manufacturing activity in China stagnated in November, British banking giant HSBC said Thursday (Nov 20), warning of "significant" pressures on the world's second-largest economy as its key purchasing managers' index (PMI) hit a six-month low.

HSBC's preliminary PMI for the month came in at the 50.0 breakeven point dividing expansion and contraction, the bank said in a statement. It was lower than October's 50.4 and was the weakest reading since May's 49.4, according to the bank's data.

The index tracks activity in China's factories and workshops and is a closely watched indicator of the health of the economy, a key driver of global growth.

Protracted easing in new export order growth led output to contract for the first time in six months, while lingering deflationary pressures suggested domestic demand remained insufficient, Qu Hongbin, HSBC's economist in Hong Kong, said in the statement.

This news story put in an appearance on the channelnewsasia.com Internet site at 11:39 a.m. Singapore time on their Thursday morning---and it's the second offering of the day from reader M.A.

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Oil industry risks trillions of 'stranded assets' on U.S.-China climate deal

Brazil's Petrobras is the most indebted company in the world, a perfect barometer of the crisis enveloping the global oil and fossil nexus on multiple fronts at once.

PwC has refused to sign off on the books of this state-controlled behemoth, now under sweeping police probes for alleged graft, and rapidly crashing from hero to zero in the Brazilian press. The state oil company says funding from the capital markets has dried up, at least until auditors send a "comfort letter".

The stock price has dropped 87pc from the peak. Hopes of becoming the world's first trillion dollar company have deflated brutally. What it still has is the debt.

Moody's has cut its credit rating to Baa1. This is still above junk but not by much. Debt has jumped by $25bn in less than a year to $170bn, reaching 5.3 times earnings (EBITDA). Roughly $52bn of this has been raised on the global bond markets over the last five years from the likes of Fidelity, Pimco, and BlackRock.

This longish, but must read article by Ambrose Evans-Pritchard appeared on the telegraph.co.uk Internet site at 9:52 p.m. GMT on their Wednesday evening---and it's the final offering of the day from Roy Stephens.  I thank him on your behalf, dear reader.

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Here Are The Highlights From The Senate's Finding That Banks Manipulate Physical Commodities

“One focus for the subcommittee is the management of Detroit-area metal warehouses run by Metro Trade Services International, the largest U.S. warehouse company certified to store aluminum warranted by the London Metal Exchange for use in settling trades.

Since Goldman bought Metro in 2010, Metro warehouses have accumulated up to 85 percent of the U.S. LME aluminum storage market...

Since Goldman took over the warehouses, the wait to withdraw LME-warranted metal has increased from about 40 days to more than 600 days, reducing aluminum availability and tripling the regional premium for storage and delivery costs...

The investigation revealed a number of previously unknown details about these deals: that Goldman’s warehouse company paid metal owners to engage in “merry-go-round” deals that shuttled metal from building to building without actually shipping aluminum out of Metro’s system; that the deals were approved by Metro’s board, which consisted entirely of Goldman employees; and that a Metro executive raised concerns internally about the appropriateness of such “queue management.

This news item was posted on the zerohedge.com Internet site at 9:28 a.m. EST yesterday---and it's courtesy of reader M.A.

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United States Mint resumes silver American Eagle sales Nov. 17 to satisfy voracious investor demand

Sales by the United States Mint to its authorized purchasers (APs) of 2014 American Eagle 1-ounce silver bullion dollar coins resumed Nov. 17, 12 days after being suspended because of a depleted inventory.

Sales resumed after the U.S. Mint was able to replenish its stockpile of coins. The U.S. Mint had 1,525,000 of the 2014 American Eagles silver dollars available Nov. 17 for APs to purchase on an allocation basis, and those purchasers bought 1,012,000 coins from the total allotted.

The U.S. Mint has experienced significantly increased investment demand over the past several weeks. Through the close of business Nov. 17, the Mint recorded cumulative sales of 40,393,000 of the silver American Eagles. Sales of the coins in 2014 are on track to break the 2013 sales record of 42,675,000 coins. (Cumulative sales may include coins minted in more than one year, so are not the same as yearly mintages.)

As I've said on many occasions all year long, this "investment demand" that they're talking about is NOT coming from John Q. Public.  That narrows it down to Ted Butler's Big Buyer.  This brief article appeared on the coinworld.com Internet site on Tuesday---and I thank reader Tolling Jennings for sharing it with us.

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Unusual gold moves in Asian hours puzzle jittery traders

Some of the biggest price moves in gold since late October have, unusually, occurred in Asian hours and traders more accustomed to following the lead of their Western counterparts suspect a big increase in algorithmic trading may be to blame.

Sensitivity to the dollar-yen exchange rate may also help explain the moves, although some traders speculated that the timing looked suspiciously like attempts to catch Chinese traders off-guard during their lunch break.

Liquidity in Asia tends to be thin until Europe wakes up but recent weeks have been different: COMEX gold futures, the busiest gold contract in the world, have suffered sharp sell-offs in Asia, sometimes sparked by the news flow or currency moves but often for no identifiable reason.

"I have spoken to a lot of people about it and the general consensus seems to be that there is a big increase in algorithmic and high-frequency trading in this time zone nowadays as it can be quite easy to push about," he said.

It's JPMorgan et al---probably hand-in-hand with the BIS---and I've been writing about this for years.  Only now does the main stream media get interested, but it's an absolute guarantee that they won't dig any deeper.  This Reuters article, filed from Singapore, appeared on their website at 2:05 a.m. EST yesterday morning---and I found it in a GATA release.

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Switzerland Net Exports 100 Tonnes of Gold in October

From looking at rising SGE withdrawals and Indian import in recent months, we knew demand was increasing consistently and huge amounts of physical gold had to be supplied from somewhere. As I’ve written in a previous post, this type of gold demand can’t be met by just mine supply and so the metal has to be sourced from countries that have large stockpiles, the usual suspects: the U.K., Hong Kong and Switzerland.

In 2013 the U.K. was severely drained (net 1,424 tonnes), last week we learned Hong Kong became a net exporter since August 2014, the latest trade data from Switzerland shows the Swiss net exported 100 tonnes of fine gold in October---75 tonnes net to India and 45 tonnes net to China.

Customs data of the usual suspects (Switzerland, the U.K. and Hong Kong) is getting exciting; they can’t net export gold forever. We know there are often shortages in these trading hubs, it’s only the price of gold that tells us otherwise.

The Financial Times reported there are currently shortages in London, from November 14:  As one refiner told me: “Over the past four weeks my cost of hedging has risen by 30 per cent. Not only that, but there is not enough liquidity in the physical market in London to settle my obligations as they come due. I have to fly gold from Zurich to London, because there just is not enough gold on offer in London. You never used to have to do that.”

The export numbers in the second paragraph don't add up, as 75 and 45 add up to 120 tonnes, so I'll be interested to see if Koos has an explanation for this in his next commentary.  This was posted on the bullionstar.com Internet site yesterday sometime---and despite the above issue, it's definitely worth reading.  I found it over at the gata.org Internet site.

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Netherlands TV network highlights Koos Jansen in program on gold

GATA consultant and Bullion Star market analyst Koos Jansen got a prominent place this week in a report on gold broadcast on the "Een Vendaag" ("One Today") news program of the Netherlands public television network, Nederland 1.

The program had a nationwide audience in the Netherlands. It covered the Swiss Gold Initiative, substantial gold buying by China and Russia, the German Bundesbank's attempt to repatriate its gold from the Federal Reserve Bank of New York, and the possibility of a transformation of the world financial system that would reintroduce gold in some form. The program is not quite 8 minutes long---and can be viewed at Bullion Star's Internet site.

The program is in Dutch but you can activate excellent English subtitles by clicking on the "CC" button at the bottom of the YouTube window---and there's a transcript as well.  This is another story I found on the gata.org Internet site---and it's worth your while.

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Dutch Bring 120 Tonnes of Gold Back to Amsterdam From New York

The Dutch central bank has secretly brought a large part of the national gold reserves being held in a secure depot in New York back to Amsterdam.

In total, 120 tonnes of gold valued at €4bn has been brought back to the Netherlands by ship, Nos television said.

The high security reparations for the move took months.

The central bank decided to bring some of its gold reserves back to the Netherlands to ensure a better spread, the bank said in a statement.

In addition, the bank hopes to boost consumer confidence by showing there is enough gold in the Netherlands to take the country through a new economic crisis.

So, why can't/won't Germany do the same thing.  This story was posted on the dutchnews.nl website this morning--and I found it on the Sharps Pixley website.

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Koos Jansen: The Netherlands Has Repatriated 122.5t Gold From the U.S.

A few weeks ago I heard a rumor that the Netherlands were repatriating some of their official gold reserves from the FRBNY. From one of my sources I even heard which security logistics company is shipping the metal, but I was kindly asked to not share this company’s name.

Last week I was approached by a financial journalist, Theo Besteman, from the biggest newspaper in The Netherlands, De Telegraaf. He asked me if I knew anything about the repatriation of Dutch gold from the FRBNY as he heard from several sources DNB was following the German central bank in repatriating gold (for the ones that are under the assumption Germany has ceased its repatriation program, please read this). I told him I heard some rumors about it and that the source was one of the big security logistics companies. He wanted to know which one, but I couldn’t tell him that. Apparently the rumors were true and Besteman did a good job finding out what was happening. The front page of De Telegraaf today: Gold Shipped In Utmost Secret.

De Telegraaf reports that for years there have been doubts at the DNB if the Dutch gold was still in New York. After a very secret and almost military operation DNB has shipped gold from Manhattan to Amsterdam, to bring about a more balanced allocation of its gold reserves and give the Dutchcitizensmore confidence by storing the goldon ownsoil to guidethe country, ifnecessary, through a following major crisis. In the previous weeks many armored trucks were seen at the DNB in Amsterdam.

The impact of the Dutch gold repatriation can be huge. First of all, because it underlines more and more countries are getting nervous about their gold reserves stored in the U.S.  Venezuela repatriated most of its reserves from abroad in 2012, the year Germany also announced a repatriation schedule from the US and France. While Germany settled with the US to ship 300 tonnes spread over 8 years, the Dutch set a new trend to insist on immediate delivery. If more counties will follow there can be a global run on gold.

This commentary by Koos is also one I plucked from the Sharps Pixley website this morning---and it's an absolute must read.  It was posted on the bullionstar.com Internet site late on their Friday evening.

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Gold-mining industry mostly under water, Gold Fields CEO says

Gold miners' costs are mostly higher than current spot prices, increasing the likelihood of write downs next year, according to Nick Holland, chief executive officer of Gold Fields Ltd.

Across the industry, costs are about $1,300 an ounce including debt repayments, Holland said by phone from Johannesburg today, citing analysts' research. Gold dropped 0.1 percent to $1,182 an ounce, bringing the decline since the beginning of 2013 to 29 percent.

"The industry by and large is under water," Holland said. "I would expect further write downs. Production I think will be curtailed but it will take some time to filter through the system."

Nick Holland certainly knows what's going on inside the gold market, but won't breath a word of it.  This Bloomberg story, filed from Johannesburg, showed up on their website at 12:44 a.m. Denver time yesterday morning---and it's another gold-related story I found on the gata.org Internet site.

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